Small and Medium-sized Enterprises

Lord Northbrook: asked Her Majesty's Government:
	How their policies encourage entrepreneurship in small and medium-sized enterprises, particularly in relation to taxation.

Lord McIntosh of Haringey: My Lords, since 1997, the Government have introduced tax incentives for venture capital and cuts in corporation tax, as well as targeted measures such as R&D tax credits and simplification of VAT administration. The UK now has a business environment that encourages entrepreneurs, with levels of regulation among the lowest in the OECD.

Lord Northbrook: My Lords, I thank the Minister for his reply. I declare an interest as a fund manager of a fund management company set up in 1996. Having encouraged smaller businesses to incorporate with favourable measures in the 1999 and 2002 Budgets, why did the Government remove a major part of the benefits of doing so in the last Budget?

Lord McIntosh of Haringey: My Lords, the Government have removed an anomaly that had become apparent. I assume that the noble Lord is referring to what is commonly known as the 19 per cent provision. I should remind him that that applies only to money taken out in dividends. Therefore, money that is invested in the business or is left in the business to provide cover is not taxed in that way. I should have thought that that was an encouragement to responsible entrepreneurship.

Lord Newby: My Lords, the Minister will be aware that at the time of the Budget the Chancellor announced that a wide-scale review of the taxation of small businesses would take place later in the year. Rather than making one change now and a whole raft of further changes that might interact taking place or being proposed in a relatively short period of time, would it not have been more sensible to delay the proposed change on the distribution to non-corporates, in the case of small business, until that review had taken place?

Lord McIntosh of Haringey: My Lords, I do not think so. Both kinds of small business are going very well. Since 1997, there has been an increase of 117,000 businesses registered for VAT and an increase of 169,000 in self-employment. When both registered and non-registered businesses, and both incorporated and non-incorporated businesses, are going well, it is right to have a review, but when it should take place is not critical.

Baroness Noakes: My Lords, the Treasury Committee in another place pointed out that it was widely predicted that small businesses would incorporate in order to take advantage of the small company tax regime created by the Government only two years ago. Does the Minister believe that the U-turn on this policy is a sign of incompetence by the Government or can he offer a more benign explanation?

Lord McIntosh of Haringey: My Lords, it is entirely responsible that we should encourage small businesses to continue to invest by retaining their profits in the business and to continue to protect themselves by protecting their reserves rather than using a loophole to pay dividends simply to avoid tax.

Baroness Carnegy of Lour: My Lords, does the Minister accept that a large number of self-employed taxi drivers were advised by their accountants to set up companies? They spent a bit of money doing so. Now they have to spend a lot more in order to undo the arrangement. Do the Government think that that is helpful to self-employed taxi drivers?

Lord McIntosh of Haringey: My Lords, I do not have any information on self-employed taxi drivers, but I have no reason to doubt what the noble Baroness, Lady Carnegy, says. The same argument applies to taxi drivers as to anyone else.

Lord Brookman: My Lords, is my noble friend aware that today we had an agreeable lunch—not he and I, but others—with small business representatives? We make up the largest all-party group in Parliament, which shows that there is a great interest in small businesses. Does the Minister agree that the key and central point for young people developing companies for the future is skills? Is the Minister satisfied that we are on the right path in relation to skills for young people?

Lord McIntosh of Haringey: My Lords, in view of what I have been saying about our support for small businesses, I am sorry that I was not invited to that agreeable lunch. Of course, my noble friend is right about skills. As he will recognise, the encouragement of skills training has been—I was going to say, "at the heart", but that is a horrible cliche—of great importance to the Government since the beginning.

Lord Northbrook: My Lords, how can small businesses plan their affairs when tax advantages that are given to them are withdrawn, particularly when the so-called loophole is created by the Government themselves?

Lord McIntosh of Haringey: My Lords, I have become a bore on this subject. I spent 30 years running a small business and I did so throughout the Thatcher and Major governments. During that time, the real threats that we faced were economic insecurity, high rates of interest and extreme variations in market conditions nationally, internally and internationally. I think that the noble Lord, Lord Northbrook, will agree—certainly, any responsible and honest small business person will agree—that these conditions, which are far more important, have improved substantially over the past seven years.

Lord Phillips of Sudbury: My Lords, given the importance to the old, to the young and to local communities of owner-occupied small shops, do the Government have any plans to encourage the survival of these entities, which are still under great pressure from the large multiples?

Lord McIntosh of Haringey: My Lords, I should not cite family interests, but on Saturday morning my elder son opened his own shop for the first time. I have some cards in my pocket for anyone interested in timber blinds. The noble Lord, Lord Phillips, has a point. However, I am not adequately briefed on it so, if I may, I shall write to him.

Hong Kong

Lord Howell of Guildford: asked Her Majesty's Government:
	What discussions they have had with the Government of the People's Republic of China about constitutional development in Hong Kong.

Baroness Symons of Vernham Dean: My Lords, we are concerned about the interpretation of two of the annexes to Hong Kong's Basic Law which the Standing Committee of the National People's Congress gave on 6 April, and by the further NPC decision on suffrage which was announced today. My right honourable friend Peter Hain raised this issue with Tung Chee Hwa, the Hong Kong chief executive, and the Chinese Vice-Foreign Minister during his recent visit to the region. Further representations have been made to the Chinese Government and my honourable friend Mr Rammell has issued statements on 7 April and again today expressing our views. He is meeting the Chinese Ambassador later this afternoon.

Lord Howell of Guildford: My Lords, I am grateful to the Minister for that reply. Would she agree that the role of the National People's Congress in the political development of Hong Kong is quite complex and open to ambiguous interpretation? Is it the Government's view that the National People's Congress, in particular regarding its latest decision which, as she mentioned, was taken today, has actually altered the Basic Law? If, as I understand, we are a guarantor of the integrity of the Basic Law, what further measures other than dialogue and discussion could we take to bring some pressure to bear on the situation and resolve it in a sensible way for all sides?

Baroness Symons of Vernham Dean: My Lords, I hope that we will resolve what is undoubtedly a difficult situation through dialogue and discussion. The noble Lord asked what further measures could be taken, but in the first instance we must adhere to dialogue and discussion because in the past it has delivered some helpful measures. The noble Lord also asked whether this has changed the Basic Law. This is an interpretation of the Basic Law, but what is different this time is that this has been a proactive process. The Chinese themselves decided to make this statement rather than being asked for an interpretation by the Hong Kong authorities. We are concerned that it means that the likelihood of reaching universal suffrage before the elections in 2007-08 looks further away, but we shall continue strenuously to argue our case.

Lord Sandberg: My Lords, further to the response of the Minister, does she agree that by and large Beijing has remained close to the agreements regarding the freedom to travel as well as religious freedom and speech, and that we should be fairly glad about what has happened in our former colony?

Baroness Symons of Vernham Dean: My Lords, I can agree with what the noble Lord has just said. That is why I was careful to answer the point made by the noble Lord, Lord Howell of Guildford, by saying that this is not a change in the Basic Law. We cannot say that a fundamental point in the Basic Law has been challenged. However, it is an interpretation of the Basic Law which is uncomfortable given that the mechanism used, that of a proactive engagement, seems to have brought rather closer together the Chinese way of doing things with the Hong Kong way. That means that the two different systems, which we believe are fundamental to the way the handover was dealt with, have been made at least that much more difficult for future discussions. It is a question of interpretation, but I agree with the noble Lord that, by and large, the handover has been one in which the Chinese have stuck by what they said.

Lord Howe of Aberavon: My Lords, I believe that I can provide some fortification for the last point made by the noble Baroness. Article 45 of the Chinese Basic Law makes provision for the ultimate aim being universal suffrage and for the gradual and orderly progress towards that aim. Does the noble Baroness further endorse the proposition that the latest announcement from the NPC appears, on the face of it, to represent no change in that direction? However, the noble Baroness may not have seen a statement issued today by the chief executive of Hong Kong asking the Constitutional Development Task Force in Hong Kong, which will submit its third report next month, to take forward actively the next stage of work relating to constitutional development,
	"in a rational, pragmatic and forward-looking manner".
	Will she therefore ensure that Her Majesty's Government encourage not only the chief executive himself, but also the Chinese Government, to support that objective in line with the provisions of the Basic Law?

Baroness Symons of Vernham Dean: My Lords, the noble and learned Lord has provided a fair summation of the position and I gladly support what he has said. He was quite right in the point he made about Article 45 of the Chinese Basic Law. The eventual target of universal suffrage is enshrined in that article. While, of course, there are no dates in the article, nor any indications about how universal suffrage might be achieved, it was hoped very much that steps would be taken towards universal suffrage before the election of the chief executive in 2007 and the LegCo in 2008. Undoubtedly we have suffered something of a disappointment in that, but none the less the noble and learned Lord is quite right to point out that we still have a great deal to argue for. We believe that the right way to do that involves the points that the noble Lord, Lord Howell of Guildford, asked us to look beyond. For the moment, however, we should be engaging in dialogue and discussion.

Lord Marsh: My Lords, has not the problem we are now facing been with us for the entire period since 1949 when the new government of China made it clear that, at the handover of Hong Kong, they would exercise complete jurisdiction as the sovereign power? Some people in Hong Kong find that unpalatable but I think that the attitude outlined by the noble and learned Lord, Lord Howe, is the proper one to adopt. We should stop pretending that we have authority over Hong Kong, which we do not and have not since it was handed back. We may then get a sympathetic hearing, which we will not while acting like a former colonial power.

Baroness Symons of Vernham Dean: My Lords, the noble Lord is right: the problem is inherent in the very nature of our period of tenure in Hong Kong. The party opposite negotiated the joint declaration in 1984 and I am sure that it did the best possible job it could in the circumstances. I do not blame it for the fact that the joint declaration does not have any hard and fast lines in it about universal suffrage and dates. I do not blame the party opposite for that; I am sure it negotiated in good faith. However, I find the implication that somehow the Government are blameworthy for not being able to push more on the issue of universal suffrage. I know that that was not an implication of the noble Lord's Question, but now and again one hears it from elsewhere. It is not a realistic position to take in view of the fact that all we can do is seek to persuade the Chinese Government in relation to Hong Kong, as a good friend of the people of Hong Kong and, I hope, as an increasingly good friend of the people of China.

Lord Blaker: My Lords, China has, in many ways, observed the joint declaration very well. Nevertheless, is not the decision of the Standing Committee of two weeks ago unsatisfactory? It seems to be saying, from the reports that I have seen, that the Basic Law of Hong Kong will mean whatever the Standing Committee decides it means. Is not that kind of impression, if it is a fair one, likely to make it even more difficult for China ever to recover Taiwan?

Baroness Symons of Vernham Dean: My Lords, I make no bones about it: both the declaration of 6 April and today's further interpretation are, from our point of view, unsatisfactory because they cause concern about the route to democracy in Hong Kong. That is absolutely clear but the point at issue is our locus in trying to do anything about it. We have the joint statement, which gives us at least the right to have discussions on these issues. But the noble Lord, Lord Howell, put it to me that we should be going beyond dialogue and discussion and that is an unrealistic position for the Opposition to take in view of the comments from the Cross Benches which, quite rightly, indicated that we no longer have a locus. Hong Kong is not in any sense a colony; it is not under a governor. We can only proceed by persuasion, dialogue and discussion and we are heavily engaged in so doing.

Criminal Justice Inspectorates

Lord Hurd of Westwell: asked Her Majesty's Government:
	What progress they are making with their review of the five criminal justice inspectorates.

Baroness Scotland of Asthal: My Lords, Ministers commissioned a review of the five criminal justice service inspectorates to examine the existing inspection regime to ensure that it is as robust as possible. A report has been received by Ministers and discussions are currently taking place with the chief inspectors and others to ensure the report properly addresses all the issues. Structural change is being considered and significant progress has been made.

Lord Hurd of Westwell: My Lords, I am grateful to the Minister for that interim reply. All the inspectorates are important but does she agree that the Inspectorate of Prisons is especially so? It is an expert body of undoubted independence and, under the previous two chief inspectors and the present one, it has done indispensable work in throwing light into corners of this public service which might otherwise remain in the dark. Can the Minister give an assurance that when the review is complete, or as part of the review, whatever its outcome, the duties and rights of the prison inspectorate will be no longer a matter of an administrative decision based on the wishes of the Home Secretary but enshrined in the law of the land with statutory back-up?

Baroness Scotland of Asthal: My Lords, I agree with the noble Lord about the important role played by the current chief inspector and her predecessors. It is absolutely vital that the function continues to operate. If change is necessary, some of it may well involve a change in the law. If that is the case, the matter will come before the House and the other place and we will all have an opportunity to have our say.

Baroness Stern: My Lords, does the Minister agree that the UK Government are to be congratulated on being one of the first three states to ratify the protocol to the United Nations Convention Against Torture in December 2003? The protocol requires the UK to put in place independent inspections of all places of detention. Therefore the remit of the chief inspector has been extended to all immigration detention centres and the military centre at Colchester. Can the Minister reassure the House that under the reorganised inspection arrangements, the UK Government will continue to meet the requirements of the convention for both the independence and the coverage of its inspection arrangements?

Baroness Scotland of Asthal: My Lords, I have pleasure in confirming that that is the case. I thank the noble Baroness for her congratulations, which I must say, if somewhat immodestly, are well placed.

Lord Dholakia: My Lords, the Audit Commission has reported that we now have the highest ever level of public spending in the criminal justice area. It has also reported that it is committed to working very closely with the criminal justice inspectors and that one of the objectives it intends to achieve is value for money. Does the Minister agree that public confidence is shaped by the quality of service provided by HM inspectors, particularly the Chief Inspector of Prisons? Will she give an undertaking that there will be full public consultation when the review report has been examined and that direct accountability to the Home Secretary and the Secretary of State will not be eroded as a cost-cutting exercise?

Baroness Scotland of Asthal: My Lords, we do not see the rearrangement as a cost-cutting exercise. The independence of the inspectorates will remain and it is paramount that it should do so. The chief inspectors will retain their direct accountability to Ministers and will be free to report as they find. We will retain their independence and professionalism and provide Ministers, their departments and the public with the information and assurance they need about the quality and integrity of the criminal justice system. We will also allow inspectorates the freedom to focus on additional areas of concern. All those issues will be fundamental to any reorganisation. There has been consultation and that will continue to be the case. As I said to the noble Lord, Lord Hurd, if legislation is necessary it will be fully discussed and everyone will have an opportunity to have their say. However, it is important at this stage to continue the consultation process that we have with the inspectors and others directly involved in order that we can make a proper, informed judgment.

Lord Corbett of Castle Vale: My Lords, I thank my noble friend for her proper praise for the work of Her Majesty's Inspector of Prisons. While she is contemplating change, will she allow that inspectorate now to inspect the Prison Service as well as the prison estate?

Baroness Scotland of Asthal: My Lords, one of the changes that we are considering is to enable the inspectorates to look at the new criminal justice system we are establishing by taking parts of the system from working in silos to working together in a more joined-up way. The whole point of change is to enable the inspection of that process to be more robust and comprehensive and to consider matters about which we need to be assured. It will enable us to be clear that the system is working well.

The Earl of Listowel: My Lords, will the inspectorate consider the issue of the training of prison officers? Given that the initial training is nine weeks, this might be a way of improving the whole culture within the prison system.

Baroness Scotland of Asthal: My Lords, we will review the issues that need to be dealt with. Anne Owers, the Chief Inspector of Prisons, is leading a team at the moment, which includes the Acting Chief Inspector of Probation. They are reviewing the future inspections of the National Offender Management Service and its wider responsibilities, including immigration detention centres and youth offending areas. We are not relying on structural change alone; we are simultaneously changing how we, as the Government, lead in setting an inspection strategy and we will create a machinery to prioritise and follow through criminal justice inspections. All these issues are matters of review now, and we want to get them right.

Iraq: Troop Deployments

Lord Astor of Hever: asked Her Majesty's Government:
	Whether Britain will provide a new headquarters unit in Najaf to take the place of Spain, and what discussions they have had on this with the American authorities.

Baroness Symons of Vernham Dean: My Lords, this matter is under active consideration with coalition partners including, of course, the United States of America.

Lord Astor of Hever: My Lords, I am very grateful to the noble Baroness for that response. We fully support the continued deployment of British troops in Iraq and agree with the Government that it is essential that we see this through. But does the noble Baroness recognise that, if extra troops are deployed outside the British-controlled south of Iraq, our influence on how security is managed must be in proportion to our contribution? Can she confirm that in the event that extra troops are deployed, they will have had sufficient training in high-intensity operations and will be properly equipped and supported?

Baroness Symons of Vernham Dean: My Lords, as the noble Lord will know, that sort of decision, where it is taken, is not just a political decision by Ministers. It would also involve thorough consultation with the Chiefs of the Defence Staff. Therefore, we can rest assured that if there is a decision—I stress the word "if"—for further deployment, it will be done on the basis that those going are properly trained. I absolutely understand the noble Lord's point in relation to influence. We have touched upon it already in your Lordships' House. Of course we would want there to be proper arrangements for the lines of communication, the chain of command, over any such deployment.

Lord Redesdale: My Lords, the Minister said "if", but if we are to replace other coalition forces, it is unlikely that other coalition forces will, in the short term, come to replace the troops that we are sending to Iraq. If that is the case, we are sending troops into a very long-term commitment. Considering how stretched our forces are at the moment, will the Minister comment on whether it is an open-ended commitment or whether it would be undertaken for the short term?

Baroness Symons of Vernham Dean: My Lords, Spanish coalition troops are withdrawing from Najaf and Qadisiyah. Troops from Honduras and Dominican Republic are also being withdrawn. The noble Lord should know that those troops amount to something less than 2,000. South Korea, for example, has indicated that it will send in 3,000 more troops, so your Lordships should not simply look at the negative side—there are also some very positive aspects.
	The noble Lord asked about the length of the commitment. These troops would be in no different a position, if they were to be sent, from the troops already there. They will be there for as long as there is a necessity for them to be there.

Lord Hurd of Westwell: My Lords, may I press the noble Baroness on the point that my noble friend put to her about the link between contributing troops and influencing policy? It seems to many of us that crucial decisions are coming up that will be taken, sometimes at short notice, in Baghdad—for example, whether to attack Fallujah, how to deal with Najaf, and, at a slightly longer distance, what powers will be transferred to the sovereign government on 30 June. All those decisions will affect us and our troops closely. How are such decisions are taken and how can we contribute our ideas and views to those who take them?

Baroness Symons of Vernham Dean: My Lords, how are these decisions taken? Let us take the position in Iraq itself, where there are exchanges not just on a daily basis but several times a day between Ambassador Bremer and our representative, David Richmond. The two representatives sit in an office at either end of, what it turns out, is more or less a shared private office. So there are those opportunities for influence not just on a daily basis but several times a day. We then go through the exchanges between the political directors such as Condoleezza Rice on the American side and Sir Nigel Sheinwald on our own side. There are ministerial exchanges as well, going through the lower ranks of Ministers right the way up to the regular exchanges that my right honourable friend the Prime Minister has with the President of the United States. So there is a wide variety of opportunity for influence over what is happening in Iraq—probably more than over most of our international relationships.

Lord Campbell-Savours: My Lords, if the interim authority, post-June, were to ask that the British troops be not involved in a operation in Najaf, would we comply or would we overrule, with American compliance, the request of the interim authority, post-June?

Baroness Symons of Vernham Dean: My Lords, that is an enormously important question, and it is not one to which I can readily give your Lordships an answer. Much of it depends on the terms of the discussions that are taking place between the representatives of the United Nations, the CPA and the Iraqi Governing Council. The whole question of what we mean by sovereignty—which is really the question that the noble Lord, Lord Campbell-Savours, is asking me—is still under active discussion. It is obviously crucial to the terms of the hand-over, and I hope we will be able to answer it before 30 June.

Planning and Compulsory Purchase Bill

Lord Rooker: My Lords, I beg to move that the Commons amendments and reasons be now considered.

Moved accordingly, and, on Question, Motion agreed to.

COMMONS REASONS FOR DISAGREEING TO CERTAIN LORDS AMENDMENTS AND COMMONS AMENDMENTS IN LIEU OF CERTAIN OTHER LORDS AMENDMENTS

[The page and line references are to HL Bill 10, the Bill as first printed for the Lords.]

LORDS AMENDMENT

1Before Clause 1, insert the following new clause—

"Application of Part 1
	Part 1 shall apply only if an elected assembly for the region has been established."
	The Commons disagree to this Amendment for the following Reason—

1ABecause it is not appropriate to restrict the application of a regional spatial strategy only to regions which have elected assemblies.

Lord Rooker: My Lords, I beg to move that the House do not insist on its Amendment No. 1 to which the Commons have disagreed for their reason numbered 1A.
	For the sixth or seventh time, I want to make it absolutely clear that the Government are committed to the reform of plan-making in England, including a two-tier development plan, with strategic planning at the regional level.
	These amendments would deny our regions strong and effective strategic plans. I find it difficult to believe that they would therefore be accepted. Those in favour of strong regional government, be it elected or otherwise, surely must want the regions to be strong enough to have effective strategic planning. The amendments would also prevent the streamlined two-tier planning system where the most up-to-date level—strategic or local—prevails when there is a conflict. That has to be taken into account.
	The amendments would also have far-reaching knock-on effects. On the one hand, they anticipate arrangements for planning by elected regional assemblies but, rather than real devolution, they would leave those bodies only with responsibility for preparing draft revisions. The Secretary of State would still publish the final regional spatial strategy, including his proposed changes, and would still have regional planning policies of his own.
	On the other hand, the amendments would leave uncertainty and muddle. The law would say that there would be regional planning bodies, consultation in line with published statements and an examination in public only where there was an elected regional assembly. We have to ask ourselves what this would mean for our existing regional planning bodies and the comprehensive arrangements we have now, which include an examination in public, for regional planning guidance. The amendments agreed by this House do not retain structure plans, but county councils would advise on strategic plans only if there were an elected regional assembly.
	We can all understand the attraction the amendments have for those Members of this House who do not want to see any regional planning under any circumstances—indeed, any regional government under any circumstances—even though they were responsible for setting up regional government offices. In due course, they hope to persuade the regional electorates to vote no in the referendum on the elected regional assemblies. That is their choice. But for those who recognise that many planning issues need to be tackled at regional level as well as at local level, this is a recipe for inaction and failure. It flies in the face of the many examples of regional planning bodies coming forward with solutions to cross-boundary problems that have bedevilled us for many years. It is quite frankly farcical to suggest that we should abandon all that and rely instead on county-based structure plans.
	I hope noble Lords accept that the Government have listened very carefully to the arguments put forward during the passage of this Bill. Indeed, I have come to the Chamber today supported by a list of all the concessions that the Government have made. We are a listening Government and we want to get consensus on this matter. However, there are some issues on which we believe that it would be a major mistake to depart from the provisions in the Bill.
	There has been concern that there would be too little democratic input, particularly by county councils with their strategic planning expertise. We accept that; I believe that I said, way back at Second Reading, that it was probably the thorniest issue we had to deal with when we were planning the Bill in detail at the time when I was the Minister responsible for it. We have responded to that concern by giving county councils a statutory advisory role. I still take the view that that has been found acceptable outside this House; I have not seen anything to contradict that.
	There has been concern that people and interests in each region would not have sufficient say in the process. That was a genuine concern, raised at many stages of our debate. I accept that the concern is absolutely genuine and sincere. We have responded by requiring the regional planning bodies to prepare, publish and comply with a statement of their policies for the involvement of the community and the public. However, we cannot accept the other arguments that have been put forward.
	We have heard that strategic planning should continue to be with county councils through their structure plans. That is despite support from the Local Government Association and the County Councils Network for our regional planning arrangements with a guaranteed role for counties, unitary authorities and other authorities with strategic planning expertise, and despite the mismatch in many cases between county boundaries and areas that are interdependent in strategic planning terms.
	We do not agree that it is wrong for regional planning bodies to have a lead role in regional planning because they include representatives from stakeholders in the region as well as local authorities. Those social and economic partners bring an important dimension to the regional planning bodies' work and are particularly well placed to foster a true region-wide perspective. Local authorities are in the majority on regional assemblies, which will continue to be the regional planning bodies. There is a view out there, which is not shared by everybody, that only the elected councillors should take the key decisions, whatever level they are elected at. That is not the reality, however. Local strategic partnerships and the regional assemblies are involving a much wider spread of opinion and achieving greater consensus about the way in which government takes place.
	Where there is considerable consensus on what the plans for the region should be, we can expect that consensus to hold sway. That is quite legitimate; we do not take the view that it is wrong that the stakeholders should be involved. We also do not agree that it is wrong that, until we have elected assemblies, the Secretary of State should be ultimately accountable for the policies in each regional spatial strategy. That is the best democratic safeguard consistent with our current governance arrangements. If an elected regional assembly were in place, the Secretary of State would not need any spatial policies for that region. I have repeatedly made that clear; there will not be any need for the Secretary of State to have any policies for that region. That will be the job of the elected regional assembly. We are not seeking to second guess those bodies. It would be contrary to the spirit of devolution for the Secretary of State to have his own planning policies for the region which the elected assembly had to have regard to in formulating its policies for the region, as proposed by noble Lords. It would also be thoroughly confusing to have two sets of planning policies for the same region. That is a barmy idea by any stretch of the imagination.
	We do not agree that we should delay the reforms in Part 1 until the elected regional assemblies are in place. That takes us back to the regional assemblies elections preparations legislation. As is well known, referendums are due in three regions; I believe that I gave July 2006 as the earliest possible date by which an elected regional assembly could be set up if there was a "yes" vote. If other regions were to be brought in, there would need to be a process and a mechanism for that. It would be bad public administration, to put it at its mildest, to seek to delay Part 1 until elected regional assemblies were in place. There may be some regions that do not want elected regional assemblies and never have them; one must consider that as a possibility because it is the people's choice. We are not imposing elected regional assemblies on the regions. The people will always be given a choice in the regional referendums beforehand. The effective strategic plans at regional level and a full part of the development plan are needed now, and need to be endorsed by the Secretary of State. Without that endorsement there is neither democratic accountability nor the assurance that central government will play their part in the delivery of regional plans. That is fairly fundamental at present.
	We are not taking away democracy, which is another argument that has been trotted out—although not necessarily in your Lordships' House. Noble Lords are much more in touch in some ways with what is happening than is sometimes the case elsewhere in this building. What really matters is that people should have their say and have their views listened to in the planning process. I do not believe that anyone could now argue, as the Bill stands, that it is not a vast improvement on the present process in allowing people a say at the earliest possible stages of the planning process. Central to our reforms, both at a regional and a local level, is greater and earlier community involvement.
	Our amendment—that is, the amendment that the Government wish to place in the Bill—will require the regional planning body to prepare, publish and comply with a statement of its policies for involving interested parties in preparing draft revisions of the regional spatial strategy. Draft regulations will require the regional planning body to consult a wide range of bodies while the draft revision of the regional spatial strategy is being prepared and after it has been published.
	There are many aspects on which it could be argued that we are not squeezing democracy out of the system. There is a much greater involvement of the public and the wider communities in regional planning in this Bill. We have come to a make-or-break point. There is a limit to the amount of time that we can devote in this place to this issue. I do not know how many times we have now dealt with it—I have lost count. I sincerely hope that my argument will find favour with your Lordships at this stage of our deliberations on this important Bill.
	Moved, That the House do not insist on their Amendment No. 1 to which the Commons have disagreed for their reason numbered 1A.—(Lord Rooker.)

Baroness Hamwee: rose to move Amendment No. 1B, as an amendment to the Motion that the House do not insist on its Amendment 1 to which the Commons have disagreed for their Reason 1A, leave out "not".

Baroness Hamwee: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 4B and 5B.
	I agree very much with one thing that the Minister said, about the concessions that the Government have given on much of the Bill and in this part of the Bill, dealing with regional spatial strategies. In fact, I believe we debated this matter only once, because it was, unusually, agreed at Committee stage. But—there had to be a "but"—the reason that we have from the Commons is that the amendment to which your Lordships agreed,
	"is not appropriate to restrict the application of a regional spatial strategy only to regions which have elected assemblies".
	That could be expressed differently. It could be said that it was not appropriate to remove powers to make such strategies from the only bodies directly elected by the people directly affected by them.
	We acknowledge the advisory role that has been given to the counties, but it is advisory only. The Minister said that he had not had complaints from the County Councils Network or the Local Government Association. He has raised that matter before. The noble Lord, Lord Hanningfield, who is a part of the County Councils Network answered the point quite clearly. The advisory role is better than nothing, but it does not amount to agreement that this is the right way to go ahead.
	We have all, I think, throughout this Bill been conscious of the role of planning in the wider governmental and political context and especially of the need to restore trust in government at all levels and reverse the alienation from the political process, which I know distresses all of us.
	I acknowledge that speeding things up and tackling inefficiencies has a major role in that, and that is why we have supported the proposals in the Bill for local development. But this amendment is about a democratic deficit—about the deficit that there will be if regional spatial strategies are the creation of the Secretary of State through his agent, the regional planning body. I dare say that the Minister will object to that description, but without Amendments Nos. 4 and 5 the Secretary of State will give directions to recognise regional planning bodies or, indeed, withdraw their recognition and exercise their functions himself.
	We have draft regulations that explain how the regional planning bodies will be created and who they will consist of, but regulations, as we all know, are not primary legislation. Indeed, the current draft regulations do not wholeheartedly inject democracy into the regional planning bodies. Thirty per cent or more of their members must not be members of local authorities, so even a public-spirited businessman or woman who is a member of a parish Council is disqualified.
	Stakeholders in a region of course have a role, but to suggest that that is equal to the role of elected councillors or elected representatives diminishes the validity of elections. Of course, all the members of the regional planning bodies, including the 30 per cent plus, are entitled to vote, and their votes carry equal weight.
	Those who come from an elected base are not directly elected under this model. So who do they represent for this purpose? We have talked—at any rate I have—about the less than complete adequacy of indirect election. There is confusion and a difficulty about the mandate, and a genuine difficulty in the mind of people who are elected to one body and find themselves on another where their primary responsibility is to the perhaps small group of people who elected them in the first place.
	I think that the Minister referred to our all being good democrats, as, indeed, we are in this place, despite being the objects of patronage. I hope he will take the message back that, without proper devolved regional government, this model for designing regional spatial strategies will not do. In Committee, we heard from those whose faith in the counties was greater than the Government's and who raised some important practical problems: the haemorrhaging of staff who see their role disappearing and the lowering of resources which the counties will apply because they have merely an advisory role.
	I would never suggest that we should lightly dismiss the views of another place, but severing the link between the electorate affected and those responsible for strategic plans would be serious—serious for effective planning and as another brick in the wall between politicians and citizens. I do not myself—as I am sure do none of your Lordships—want to contribute to building up that wall. We want to pull it down. I beg to move.
	Moved, as an amendment to the Motion that this House do not insist on its Amendment No. 1 to which the Commons have disagreed for their reason numbered 1A, leave out "not".—(Baroness Hamwee.)

Lord Hanningfield: My Lords, I support the amendment moved by the noble Baroness, Lady Hamwee. I should make it clear that noble Lords on these Benches do not support regionally elected assemblies. We shall not campaign for "Yes" votes in the three areas where there are referendums. However, we support democracy. If those three areas vote "Yes", and then all other areas vote for regionally elected assemblies, those assemblies will be democratically elected.
	I echo the words of the noble Baroness, Lady Hamwee. The noble Lord, Lord Rooker, said that stakeholders were very important. It is important to hear stakeholders' opinions. I know the stakeholders in my region well. They often hold their own individual views, but they are not democratically elected. If they can combine to defeat the democratically elected people in a region, it is not good for democracy, and any such action is not representative of the people who are elected to a county council, a district council or any other body that considers plans. We support the amendment. We do not support regionally elected assemblies, but we support democracy. At the moment, we have elected county councils and elected district, regional, borough, metropolitan and London councils. The people elected to those bodies should have the direct, most obvious say in the planning process on behalf of the people they represent.
	The Minister referred to the County Councils Network. I thank the Minister and the Government for the concessions that have been made. Indeed, the concession regarding the county councils having an advisory role is important. However, the councils were happy to accept that because they were told that the Government would not accept anything else. However, we are talking about Parliament now. There is the Government, and there is Parliament. These processes have to go through Parliament. I told the county councils that Parliament might have slightly different views on regional spatial strategies.
	I make it clear that no one—as everyone knows, I am very much involved in county government—is suggesting that the county structure plans are the right way forward. We need to tackle that matter differently and more speedily. The Minister has never heard me say during the whole debate on the Bill that I want to retain county structure plans—I do not. We want a modern system of planning and therefore we support many of the Government's objectives on that. However, we want to make it work. We want a democratic process in making it work. Later I shall move further amendments which ensure that we keep the democratic processes at the forefront. The Government are democratically elected, as are local councils. Planning is about people. People elect other people. There is no more personal thing in local government than planning. The Government should not think that they can ignore the democratic processes. I agree that there should be consultation, but in the end the matter is the responsibility of the elected members of local authorities. I support the amendment of the noble Baroness, Lady Hamwee.

Lord Marlesford: My Lords, I express sorrow at the Government's attitude to this matter. It seems that in a funny sort of way the Government somehow believe that the higher the level at which the strategic planning is done, the better. We all agree that strategic planning is essential in these matters. One almost feels that the Secretary of State would ideally like to do the whole thing himself, but he is prepared for the regional authorities to be involved. However, we know that in their present format those authorities have a severe democratic deficit because of a lack of what many would regard as a better election system.
	We believe that you must have a sub-regional input—a legitimate and fully accountable and accounted-for sub-regional input—to this crucial strategic planning element. It is not good enough for the Government to say that it has to be done at the regional level. The Minister says, "Of course, if there is a regional government, the Secretary of State would have no input". That in a sense makes the point that I am trying to make; namely, that even though you need planning on a big scale, you nevertheless need elected input into it. The amendments, as they left this House, provided for that and should not be removed. I support my noble friend and the noble Baroness, Lady Hamwee.

Lord Rooker: My Lords, I am glad that the noble Lord, Lord Marlesford, made that speech. I agreed with virtually every word that he said. I shall give examples to support his and my case.
	I have something to say, tongue in cheek, in reply to what I heard from the noble Lord, Lord Hanningfield. I would obviously never dream of accusing anyone in this place of bad faith; it would not cross my mind. However, there are those outside who, on one hand, are quite happy to sit down with government Ministers and agree reasonable concessions—there has been a big concession from the Government, as I fully appreciate, from how the Bill was drafted. Then we are told that those people say, with a nod and a wink, "Okay, we're happy, but we'll get what we really want through the back door via the unelected House of Parliament, not the elected House". If they do not blink at that, it seems to border on dishonourable conduct in the negotiations by the outside bodies with central government. People cannot have it both ways.

Lord Hanningfield: My Lords, I am not saying that. If well meaning officials of the LGA or a county council go to see government officials and are told that the Government will not budge, they are only officials, not elected members. They then try to negotiate something that they can take back to their elected members. There is no bad faith on the part of the Government's officials or ours from the LGA or the County Councils Network. They can only negotiate what they can negotiate. As I said, it is then up to both Houses—this may not be an elected House, but there have been debates in the other place—to talk about how we might improve the situation. I would not put bad faith on to any of the officials who took part in the discussions.

Lord Rooker: My Lords, I did not mean the officials. However, I shall take it with a strong pinch of salt next time I see letters signed by the elected leaders of the LGA and the County Councils Network. It was not officials who wrote letters saying, "We're content with this", but the elected leaders. I am not arguing about officials; we are talking about elected leaders. I am not in the business of blaming either civil servants or officials outside—far from it. My remarks are headed towards the elected leadership outside.
	I want to give some examples to highlight the sort of things said by the noble Lord, Lord Marlesford. As I said, I agreed with him, and there is a common view on the matter. I have three examples of where regional planning is tackling issues that county plans could not. In the east Midlands, work has started on the development of a sub-regional strategy for Derby, Leicester and Nottingham. Those are, of course, traditionally very much competitor cities in the area, although each is in a different county. The regional assembly and development agency have identified an opportunity to build on existing interrelationships, and to develop complementary roles and services that will promote a more sustainable pattern of development and improve the economic performance of each city. That could not be done if one did not have a regional package with a sub-regional agenda underneath it. In the past that would not have been a runner as each city is in a separate county.
	In the south-west, the regional planning body is promoting a "city region" approach that recognises the cross-boundary links. It is not an area of the country that I know, so I shall stick to my brief; others are more expert than me. Structure plans have historically allowed development in west Wiltshire and north-east Somerset towns that has fed Bath's labour market and created unsustainable patterns of movement. Looking at that area as a single sub-region is allowing strategic choices to be made to ensure that development is sustainable.
	My final example is the south-east. Studies in the western corridor and the London fringe have been undertaken to provide coherence across regional boundaries in a manner that simply did not exist beforehand. Although there was liaison across the London boundary between authorities, it was not translated into effective and co-ordinated interaction. The studies are still at an early stage but they are already demonstrating the value of the approach.
	To say that the Government made a concession is too strong, because it looks as though it had to be dragged out of us, but I suppose that in some ways it did. The point is that we always knew, from day one, that there was a sensitive issue about county councils. We understand that; hence what was proposed alongside a programme of possible elected regional assemblies, as one cannot be certain. We need to get ownership of the spatial strategies because two bodies claiming ownership is a disaster and a recipe for inaction. Conservatives—with a small "c"—might want to conserve what we have and not change anything. That is a very unfair attitude to put on the radical Conservative Front Bench. Nevertheless, we want some movement. The present system of planning in this country does not serve our fellow citizens. The provision is a contribution to making substantial changes and progress.
	Our approach is that the regions need planning policies specific to their circumstances. I forget who made the point, but someone referred to the Secretary of State wanting to do everything; he does not. The provisions in Clause 1(2) that specify that the regional spatial strategy must set out the Secretary of State's spatial policies do not prevent such an approach. Those provisions are not a straitjacket. They are not the Deputy Prime Minister saying, "This is what will happen".
	The relationship between the Secretary of State's national planning policies and the regional spatial strategies needs to be clarified. Clause 5 requires regional planning bodies to have regard to national policies in preparing a draft revision of a regional spatial strategy. That relationship is also true of regional planning guidance. We want the regional planning bodies, which are much wider than the elected areas—that is why the point about 30 per cent is important—to articulate in the regional spatial strategy a spatial vision of what the region will look like at the end of the period of that strategy. That vision should be unique to that region, not the next-door region. It is not simply a subset of the national picture, so is not the Secretary of State laying down what he wants.
	The regional planning bodies have the freedom to set out the policies that will work in their regions to turn the vision into a reality. The national planning policies are there to provide a framework. They are the big picture, not a straitjacket. The existing system allows for significant flexibility between regions. When preparing revisions of regional planning guidance now and regional spatial strategies in future, the regional planning bodies may, if they wish, depart from national policy and make the case for a variation at the examination in public. I repeat: this is not the Secretary of State laying the law down from the centre.
	It is true that Ministers will reach a view on the final form of policies and have to take into account the case made and the report of the panel from the examination in public. Amendment No. 2 is therefore neither acceptable nor sensible. The Secretary of State has regional planning policies and is accountable for them now and under our proposed new regional planning system, because that is the best approach of the current governance arrangements. If the elected regional assembly were in place to play that role, the Secretary of State would not need any regional spatial strategies. That in no way takes away the important role of staff of the county councils. They will play a vital role, although the point is that it will not be the role that they had previously.
	The issue is to get ownership of the regional planning strategies so that they are owned by one body and there is transparency and accountability. If we try to act any other way, two bodies will end up claiming ownership of the strategies. That is a recipe for not only disaster, but basically total inaction. No one outside would thank this House for that.

Baroness Hamwee: My Lords, as the Minister says, the issue has always been sensitive. The sensitivity was eventually addressed when the Bill reached this House after its extended—sometimes almost undetectable—progress in another place. In our system, of course there are negotiations and discussions while a Bill is in progress. However, to characterise what happened as dishonourable on the part of those who took part is unfortunate.
	The Minister used examples of cross-boundary arrangements, the sort of examples that I intended to use in a debate that we may have later on sub-regional arrangements. Those cross-boundary arrangements are happening now. I do not accept that what is proposed is a recipe for inaction. The Government have not moved on the fundamental question of the lack—indeed, I would say the loss—of democracy. They have not come up with any way of meeting their concerns at the same time as meeting that basic and important concern. Therefore, again I wish to test the opinion of the House.

On Question, Whether the said amendment (No. 1B) shall be agreed to?
	Their Lordships divided: Contents, 125; Not-Contents, 116.

Resolved in the affirmative, and amendment agreed to accordingly.
	Motion, as amended, agreed to.

LORDS AMENDMENT

2 Page 1, line 7, leave out "must set out" and insert "shall have regard to" The Commons disagree to this amendment for the following reason—

2ABecause it is not appropriate to make such provision.

Lord Rooker: My Lords, I beg to move that the House do not insist on its Amendment No. 2 to which the Commons have disagreed for their reason numbered 2A.
	Moved, That the House do not insist on its Amendment No. 2 to which the Commons have disagreed for their reason numbered 2A.—(Lord Rooker.)

On Question, Motion agreed to.

LORDS AMENDMENT

3 Page 1, line 11, at end insert—
	"(3A) The RSS must include sub-regional plans for all parts of the region in accordance with geographical boundaries defined by the RPB.
	(3B) The sub-regional plans referred to in subsection (3A) shall be prepared by the authorities falling within section 4(1) if their area or any part of their area is in the defined sub-region." The Commons disagree to this amendment for the following reason—
	3A Because it is not appropriate to create more than one tier of regional spatial strategy.

Lord Rooker: My Lords, I beg to move that the House do not insist on its Amendment No. 3 to which the Commons have disagreed for their reason numbered 3A.
	The amendment would require the regional spatial strategy to include sub-regional plans for all parts of the region and for these to be prepared by such county councils, metropolitan district councils, unitary authorities and national park authorities if their area or any part of it is covered by the sub-region. We are not clear why the noble Baroness is pursuing the issue when the Local Government Association and the county council network are committed to working within the new strategic planning arrangements. Well, that is what is written down here, but I might redraft it for the next stage. No doubt I will hear about it when the other amendment is spoken to.
	The regional spatial strategies will contain a new emphasis on sub-regions. I fully accept what was said at the end of the previous debate when I gave three examples to the noble Lord, Lord Marlesford. What I described in them is happening now, so I cannot claim what will happen if the Bill is passed.
	Under the present arrangements with the regional assemblies, the regional planning bodies, a new regime, which are not exclusively elected, the action is already taking place. That regime will carry across, so a new culture of planning is enabling the sub-regional work in the three examples I gave now to take place. It was not taking place prior to the regional assemblies being the regional planning bodies.
	The regional spatial strategies will contain a new emphasis on sub-regions. As draft planning policy statement 11 makes clear, where sub-regional strategies are being drawn up, we would expect those authorities with strategic planning expertise in the area to take the lead on or participate in that work. We expect the sub-regional strategies with a distinct set of policies for parts of the region to be the exception and not the rule. Those sub-regional strategies will form an integral part of the regional spatial strategy.
	We cannot afford to see a proliferation of plans under the guise of sub-regional strategies. That is not the plan; and nor would it make sense because they would be fully integrated and would serve only to create confusion and uncertainty for the community, local planning authorities and developers. That is one of the problems with our existing planning system. We do not accept that a two-tier planning system will leave us with an unbridgeable gap between regional and local plans.
	Where we would otherwise be faced with a strategic policy deficit, sub-regional strategies will be prepared to deal with the specific growth or regenerational needs of an area, for example. Indeed, the three-tier plan system, constrained as it has been by administrative boundaries, has sometimes failed to tackle sub-regional issues which are now for the first time beginning to be looked at in the revision of the regional plans. I mention the three-city area of Nottingham, Leicester and Derby of the east Midlands as one example.
	Another example I can give, because I have dealt with it, is the separate sub-regional strategy documents being prepared in relation to the Milton Keynes/south Midlands, growth area and in due course the Thames Gateway. Where sub-regions cross regional boundaries—and the Milton Keynes/south Midlands growth area is an obvious example—it makes sense to have a separate sub-regional strategy document. But we must remember that the Milton Keynes/south Midlands sub-regional strategy is prepared by three regional planning bodies affected and will be adopted as alterations to their three regional spatial strategies. In the Thames Gateway, a non-statutory sub-regional framework is being prepared, but this reflects the unique circumstances of the sub-region rather than providing a model for other regions. I would not dream of saying that it should be a model.
	We need a system with strong regional plans that includes sub-regional strategies where necessary. We need to involve authorities with strategic planning expertise closely in their preparation. That is what the new system is supposed to achieve—the one we proposed in the Bill with the amendments and with a strong role for county councils. A statutory layer of sub-regional plans, which is envisaged in the other amendment, will simply mean that the system becomes bogged down again by too many plans which are too often out of date and out of line with each other. I repeat what I said at the end of the previous debate—there will be an argument about who owns the plans. It will not be clear to the public and it will benefit no one. I commend the Motion.
	Moved, That the House do not insist in its Amendment No. 3 to which the Commons have disagreed for their reason numbered 3A.—(Lord Rooker.)

Lord Hanningfield: rose to move Amendment No. 3B, as an amendment to the Motion that the House do not insist on its Amendment No. 3 to which the Commons have disagreed for their reason numbered 3A, leave out "not".

Lord Hanningfield: My Lords, I hear and thank the Minister for what he has said and we thank the Government for the discussions and the concessions that have been made. Many of those were a result of our discussions in this House. I feel strongly about the amendment and I shall go into the reasons why. Throughout the Bill, I have felt that the Government have got it wrong.
	I accept, as do Members on these Benches, that the Government will have a new planning system and ultimately new spatial strategies. Indeed, we are working on them in the eastern region. I am a Member of this House and, as everyone knows, I am the leader of a large local authority. As such, I like to make things happen. As a Member of this House, I am debating legislation, which is different, but locally I am an action man. I sincerely believe that my amendment is more likely to make things happen than the Government's system of enormous regional spatial strategies and a local council delivery plan in most of the country through the counties and districts.
	I will go so far as to say that if we do not look at the provision again, we shall be able to say, "We told you so". The previous Minister for local government, Hilary Armstrong, wanted a standards board but I argued that it was better to act locally. The Government have reverted to that idea. We made the same point in respect of best value, for instance, and the Government have accepted our suggestion that the procedure should not be so complicated. I am now moving an amendment which will help the Government to deliver what they want to deliver.
	My county is in the midst of a great deal of development and we are working in conjunction with that—no one has said that it will work independently. The noble Lord, Lord Rooker, referred to Milton Keynes, which is my example of the Government creating a precedent. They are looking at a sub-regional spatial strategy which will take over the regional spatial strategies.
	Turning to my own county again, we have the M11 corridor, which is obviously very dear to the Government in development policies. We have the A12 corridor, along which tens of thousands of houses and businesses are still being built. We have the Haven Gateway, which, in conjunction with parts of Suffolk, we hope will regenerate a deprived part of the eastern region. We also have the Thames Gateway, in which I am very much involved. That work is already going on at a sub-regional level. It cannot be done by a vast regional board. I have quoted statistics about the south-east on previous occasions. The south-east region is bigger than Austria. The eastern region is bigger than several European countries. My own county is bigger than four countries that are just about to join the European Union.
	I know a lot about European and American systems. I have studied local government and planning systems in both those continents. No other country would create a body that is so vast and approach matters from that end. I know that it is not going to work. I have been an action person in local government for 34 years and I know what works and what does not. I am helping in Basildon, where we are taking an initiative. I believe in the regeneration of Basildon. We are investing £20 million of county council money in it. If the county council is taken out of the equation, it will not help with the regeneration of Basildon because it will not be involved in it.
	The Government are shooting themselves in the foot by not looking at the matter again. It is all very well to sit in offices in Whitehall and think that it might work. I know how it can work on the ground and I am suggesting ways of making it do so; that is, by making sub-regional spatial strategies part of the regional spatial strategy, involving local members at local levels and often putting money and resources into it. We have a superb person in Essex County Council who is helping to redesign Basildon. We are loaning him to Basildon. That kind of initiative will just not happen under the Government's legislation. The noble Lord, Lord Bassam, will know what I am talking about, because he has been the leader of a local authority as well. If we are to have a new system, let us make it work.
	I hope that the Government will think again about the amendment because it is important that we develop sub-regional plans to complement the regional plan, given the size of the regions in question. I beg to move.
	Moved, as an amendment to the Motion that the House do not insist on its Amendment No.3 to which the Commons have disagreed for their reason numbered 3A, leave out "not".—(Lord Hanningfield.)

Baroness Hamwee: My Lords, the formal reason that has been given for the Commons' disagreement to the original amendment is:
	"Because it is not appropriate to create more than one tier of regional spatial strategy".
	The amendment would not do that. It would create not another regional spatial strategy, but a sub-regional one. I do not need to repeat all the good examples that have been provided by both sides of the House of the importance of partnership and of working across boundaries.
	I noted how keen the Government themselves were on a sub-regional approach in, among other things, sustainable communities work. The Government recognised the need for action at a sub-regional level. Sub-regions come in a number of shapes and sizes, so it must be important for the regional spatial strategy to be transparent in identifying and explaining its relationship with the sub-regions.
	Reference was again made to the Local Government Association and the County Councils Network. We on these Benches often agree with their views and aims, but we do not regard ourselves as their delegates. We regard ourselves as legislators as part of Parliament. We are not at their or anybody's beck and call. Although we often support them in their aims, our position is quite distinct. It is important to put that on the record in light of some comments that have been made. We support the amendment.

Lord Rooker: My Lords, the noble Baroness can put all she likes on the record about those two organisations. I stand by everything that I have said.
	I agree with what the noble Lord, Lord Hanningfield, said about Basildon and what Essex County Council is doing there. That is absolutely right. I raised the example of Milton Keynes myself. It is a question of horses for courses. Part of the problem with the amendment is that it would require sub-regional spatial strategies for all parts of the region. In some ways, we need a horses-for-courses approach. Where a need is perceived, we should go ahead with a sub-regional strategy. It may be that local authority boundaries cross over regional boundaries—that is part of the problem in a way. It is important that we are able to do that; otherwise, we would be bound by lines on a map, which would be ridiculous. Co-operation is taking place now in sub-regional work, but the results are more difficult to deliver than they should be. That is because when sub-regions become part of regional planning guidance, they are not part of the development plan. To become so, they must first be incorporated into the structure plans and then into local plans. That takes a lot of time. Until the process is complete, the results lack clarity.
	The noble Lord, Lord Hanningfield, quoted various examples of areas that are sub-regions, but that are not necessarily coterminous with local government boundaries. Under the system that we are proposing in the Bill and in all the guidance that would flow from it, where sub-regional strategies are necessary or beneficial—for that is clearly what we want—they will be prepared as part of the regional spatial strategy. There will be no need for that to be done in a convoluted fashion as it is now. We are not against sub-regional strategies. I hope that I have made that absolutely clear. That is self-evident from the way in which we are implementing the sustainable communities plan in the Milton Keynes and south Midlands areas, as well as in the Peterborough-Cambridge-Stansted-London corridor, which has grown slightly since we extended it. Those areas cross over many local authorities and some issues necessitate sub-regional strategies. Nobody is denying that. Our objection is to the idea that we should cover the whole country with sub-regional strategies. Surely they should occur only where there is a perceived need for a sub-regional strategy, based on history or whatever is proposed. It may not necessarily be based on history. At the moment, sub-regional strategies are being formed because of what the Government are proposing through the communities plan. There would have been no need for the sub-regional strategy in Milton Keynes and the south Midlands, for example, if it were not for the proposals in the communities plan. Therefore, where there is a perceived need for a sub-regional strategy, one should go ahead and do it, but the idea that every square inch of England should be covered by a sub-regional strategy makes no sense.

Lord Hanningfield: My Lords, obviously, some sub-regional spatial strategies would be very active; others would require more time. Due to the communities plan and other initiatives in the eastern region—Stansted airport, for example—the whole of that region requires a sub-regional spatial strategy at this moment.
	I repeat that nobody wants ultimately to deny the Government their regional spatial strategies. The sub-regional spatial strategies are a component of them and work in conjunction with them, as the Government have just admitted in the case of Milton Keynes. They would work in conjunction with regional spatial strategies. I repeat that I want to see a system that works for the benefit of our communities that we represent. Essex has 12 district councils. They get on better with the county council than with each other. If anyone is going to make something happen, it has be the county council acting in co-operation with two or three district councils. I am there and I know how that works. Unfortunately, it does not work in an office in Whitehall as it works at local level. If the Government want to make the system work on the ground, they should pay heed to what I am suggesting. If the Bill were passed as the Government require, we would be back at it from a sub-regional angle before we know where we are. That is the only way in which places can be designed and developed and in which the support of local people can be won. If somebody is deciding what will happen from a remote office, without the real involvement of local politicians, the system will just not work.

Lord Rooker: My Lords, this is important. The noble Lord is the leader of a very important local authority. I assure him from personal experience that in none of the places where we are undertaking the communities plan process are we ignoring the local elected politicians—far from it; we are bending over backwards to work in partnership with them. They are the key partnership players in every area, even if the delivery vehicle which we are proposing is statutory in some areas. In other areas, the vehicle is led by the local authority. We are seeking such agreement for horses for courses to ensure that we get the correct delivery vehicle that fits the need for those areas.
	So in no way are we seeking to ignore local politicians. There is plenty of evidence of that everywhere I go. Last week I visited both Hertfordshire and parts of Essex, listening to people with different perspectives and from different parties. I listened to those in power—those with whom we are doing business—and to others who represent the community, including those from the local strategic partnership. However, nowhere are we ignoring local elected politicians. They are the key players and key partners. In one growth area the local authority—and in another, the local authorities—is setting up and will be driving the delivery vehicle for that area's communities plan. I would not want the noble Lord to think that we are ignoring or do not want to work with local government; far from it.

Lord Hanningfield: My Lords, I thank the Minister for that. I know that he is making visits and that various people are pleased to see him and to talk about development problems. I am saying that the approach to these issues has to be sustainable. These issues are not just items on paper to be addressed when the Minister visits; people need to be involved in them, particularly if they involve large amounts of housing or development. We have debated this issue at length and we should ask the view of the House on it.

On Question, Whether the said amendment (No. 3B) shall be agreed to?
	Their Lordships divided: Contents, 132; Not-Contents, 116.

Resolved in the affirmative, and amendment agreed to accordingly.
	On Question, Motion, as amended, agreed to.

LORDS AMENDMENTS

4 Clause 2, page 2, line 3, leave out from beginning to "region" in line 4 and insert "The elected assembly shall be the regional planning body for the" The Commons disagree to this amendment for the following reason—
	4A Because it is not appropriate to restrict the application of a regional spatial strategy only to regions which have elected assemblies.
	5 Page 2, line 6, leave out subsections (2) to (6) The Commons disagree to this amendment for the following reason—
	5A Because it is not appropriate to restrict the application of a regional spatial strategy only to regions which have elected assemblies.

Lord Rooker: My Lords, I beg to move that the House do not insist on its Amendments Nos. 4 and 5 to which the Commons have disagreed for their reasons numbered 4A and 5A. I spoke to these amendments when we dealt with the first group, headed by Amendment No. 1.
	Moved, That the House do not insist on its Amendments Nos. 4 and 5 to which the Commons have disagreed for their reasons numbered 4A and 5A.—(Lord Rooker.)

Baroness Hamwee: rose to move, as an amendment to the Motion that the House do not insist on its Amendments Nos. 4 and 5 to which the Commons have disagreed for their reasons numbered 4A and 5A, leave out "not".

Baroness Hamwee: My Lords, I spoke to these amendments in the first group. They are perhaps not technically consequential, although I think that they may be. However, they are certainly very closely tied to the first amendment, which, indeed, would not make sense without them. I beg to move.
	Moved, as an amendment to the Motion that the House do not insist on its Amendments Nos. 4 and 5 to which the Commons have disagreed for their reasons numbered 4A and 5A, leave out "not".—(Baroness Hamwee.)

On Question, Whether the said amendment shall be agreed to?
	Their Lordships divided: Contents, 105; Not-Contents, 118.

Resolved in the negative, and amendment disagreed to accordingly.
	On Question, Motion agreed to.

LORDS AMENDMENT

21 Clause 22, page 13, line 15, leave out "(other than a development plan document)"
	The Commons disagree to this amendment for the following reason—
	21A Because it is not consistent with measures to speed up the plan making process.

Lord Rooker: My Lords, I beg to move that the House do not insist on its Amendment No. 21 to which the Commons have disagreed for their reason numbered 21A.
	The Government have been clear from the outset that one of the key elements of our planning reforms is for the recommendations of the independent inspector, following an independent examination, to be the final stage in the preparation of a development plan document. However, the amendments seek to retain the status quo, which is totally unacceptable.
	The government offices have told us of at least 18 development plans where progress has been or is being held up because the procedures have become long winded and mired in controversy. In some cases the local authorities have not wanted to implement the independent inspector's recommendations, which have been made as a result of careful examination and consideration of all the material available at a public inquiry, including the objections. In others, initial delays lead to other factors having to be considered as circumstances change and new national and regional policy needs to be incorporated. The introduction of binding reports could save several years, which would be good for everyone.
	As regards the 18 cases—I have raised the point so I have to give a partial apology—it would not be appropriate for me to name any of the locations. Some of those could appear on the Deputy Prime Minister's desk and if any related to areas I deal with, that would be prejudging the case, and we might need to intervene in any subsequent decisions that rest upon the development plan. We cannot fetter discretion.
	The binding reports of independent inspectors after independent examination in public of the issues, including those who object, have other benefits if they are binding on the parties concerned. They are a major incentive for tackling issues, proper debate and decisions early in the process. They ensure that investment by the community and others in making representations on a development plan document and participating in the independent examination will always be worth while. People will think that it is worth while. They will get the report from the independent inspector and something will happen whereas, as I have said, in some cases, years later nothing has happened. To have a report from an independent inspector following independent examination underpins sound plans.
	The amendments, which I ask the House not to accept, would squander those benefits. The main argument put forward is that the inspector might make a mistake. Because of that risk it is argued that local authorities must have the opportunity to do something different from that which the inspector recommends. I developed this point at previous stages but obviously inadequately. We see the safeguards we are building into the system as much more sensible and a balanced response to the difficulty.
	The local planning authority already sees the inspector's draft report and can point out factual errors. So, there cannot really be any excuse after the report is published for stating that it contains errors because the local authority will see the report and can point out factual errors. We propose that those arrangements should continue. There is the safeguard of the Secretary of State's powers in Clause 20 to direct changes or call in a development plan document.
	I accept that the vast majority of inspector's recommendations are accepted by local planning authorities. We are not making a general sweeping case. The introduction of binding reports is a sensible measure, which will bite on those hard cases—for instance, the 18 I have mentioned, although not by locality—where the communities are denied the up-to-date plans they and their areas need.
	There are a couple of points worth raising. If the authority refuses to adopt the development plan in line with the inspector's recommendations—assuming that the Bill is acceptable and as the Government would like it—any such authority in that case would be doing a grave disservice to its commmunity in denying it a sound, up-to-date development plan document having had the independent inspector's report and after examination. I accept, however, that there is a final safeguard, which is the Secretary of State's powers in Clause 20. We do not want to use those powers. They are there purely as a long stop. As I have repeatedly said, we do not want to run the system.
	One other point is worth raising. It was raised at other stages of the Bill. An inspector taking evidence in public and producing a report might make changes to a development plan document. In other words, some issue might come into his mind when he was having a think about the matter one Sunday afternoon and drafting the report. I want to make it absolutely clear. The inspector will be able to recommend a substantive change to a development plan document only if people have had the opportunity to make representations on it, or if it has been considered at an examination and the representations or debate support that change. There is no possibility of the inspector slipping changes into a document on a hunch or a whim that have not been discussed at the examination.
	The inspector may consider that the development plan document does not meet the test of soundness—it is useful to put this on the record—if the plan does not generally conform to national and/or regional policy. That is fair enough; I think that is what he would be there for. Also, if the plan is not supported by a sound evidence base. That is what an independent view with independent evidence is designed to tease out. In addition, if the local planning authority has not complied with its own statement of community involvement—it is fairly crucial that we have somebody who is independent to check on that—or if the local planning authority has not undertaken a suitable sustainability appraisal and strategic environmental assessment.
	There are those issues. That is why we think that, as I have said, the vast majority of local councils accept an inspector's recommendations. However, we have cases around the country where they have been frustrated for years simply because local authorities have not wanted to implement the inspector's recommendations. That is incredibly frustrating. It adds to the vast uncertainty. It is frustrating for those people who want to put their money into development proposals—for example, by way of investment—let alone for those people who have put in their own personal assets, in the sense of their time, energy and effort, in giving evidence at the inquiry to see that all go to waste. The whole system is brought into disrepute if an independent inspector's report, having been taken through an independent inquiry, is simply ignored. It is just not good enough; hence the Bill's attempt to bring about the situation of binding inspectors reports. I beg to move.
	Moved, That the House do not insist on its Amendment No. 21 to which the Commons have disagreed for their reason numbered 21A.—(Lord Rooker.)

Baroness Hamwee: rose to move Amendment No. 21B, as an amendment to the Motion that this House do not insist on its Amendment No. 21 to which the Commons have disagreed for their reason numbered 21A, leave out "not".

Baroness Hamwee: My Lords, the provision is for all local development documents, including the development plan documents, to be dealt with in the same way as in the original bill, providing that the development plan document cannot be adopted other than in accordance with the inspector's recommendations.
	The Commons reason for disagreeing with our amendment is that it would not be consistent with measures to speed up the plan-making process. The Minister has been very forceful on that point—far more forceful, if I may say so, than when we originally debated whether the inspector's report should be binding. At that time we were talking about periods of around six months; now, it is several years.
	Ministers have talked about the opportunities open to local authorities if the inspector gets it wrong—recourse to the courts, reconvening the examination in public, preparing a new document and even requiring the intervention of the Secretary of State. It seems to me that any of those courses might take far longer than the six months, which is what we were told was in issue.
	I understand the arguments that have been made during the discussion of this issue about the front-loading of community involvement, and that "soundness" as a criterion covers everything that the local authority would itself want to have regard to. That is so. Presumably, under the proposed new system, if a developer appeals against planning refusal on a matter on which the local planning authority takes a different view from the inspector, the local planning authority's views would not even amount to a material consideration. At the moment if there is a difference that provision comes into play. I do not know whether the Minister will be able to confirm or deny that.
	What it comes down to is that the Government would prefer to trust an inspector—I shall not quarrel over his independent status, although I do wonder whether it is necessary to have an independent person to check whether a local authority is complying with its own policy, which is what has just been suggested—rather than an elected local authority. Even having listened to the argument made again today, I do not understand that. In a matter of judgment, is it not right that the democratically elected body not an appointee—an independent person but an appointee—should make the judgment?
	It may be that the Government do not want to say that they do not trust local authorities not to obstruct house-building plans. We have heard the Minister describe the problems of nimbyism—I apologise to him for using an acronym because we have tried to avoid them—at local level, but the Government have not actually said that. If the inspector has done the job thoroughly, the local planning authority is likely only very rarely to object to the recommendations. At the price of six months, or perhaps just occasionally a lot longer—if it is a lot longer the position must really be very complicated and I would suggest that there must be many issues to sort out—is it not worth not just getting the development plan right but being able, by putting the weight of the local authority behind it, to show that it is right and widely accepted?
	I have not yet been struck by lightning for suggesting that six months is not terribly long in the matter. The older I get—and we have all got a lot older during the course of the Bill—the shorter the period I feel that it is. Amendment No. 21D standing in the name of the noble Baroness, Lady Hanham, proposes that the authority cannot adopt a development plan unless it is certified as being in general conformity with the regional spatial strategy or spatial development strategy in London. As I said to her before we came into the Chamber, I am not entirely sure whether that is very cunning or whether it makes no difference in that general conformity would be required in any event because of that being about a part of the plan being sound—to use the technical term. I had hoped that we might hear whether the Government have comments on the amendment or indeed might accept it. We have not heard that, but I look forward to hearing the noble Baroness's arguments. I beg to move.
	Moved, as an amendment to the Motion that this House do not insist on its Amendment No. 21 to which the Commons have disagreed for their reason numbered 21A, leave out "not".—(Baroness Hamwee.)

Baroness Hanham: My Lords, I speak to Amendment No. 21C. It is undoubtedly a matter of great cunning, to follow up on the comments of the noble Baroness, Lady Hamwee. At Third Reading we debated what we perceived to be unsatisfactory proposals in the Bill that recommendations made by an examiner or an inspector of a development plan documents should be binding on the planning authority. The issue was bound to reappear for a further run if the Government were not prepared to agree to or to look at amendments.
	I am disturbed to know that it is because of 18 recalcitrant local planning authorities that this clause is deemed to be germane. I am not sure how many planning authorities there are in this country. There must be in the region of 450 to 500 local authorities, so 18 is a remarkably small percentage to be dictating legislation.
	The noble Baroness, Lady Hamwee, laid out the concerns that we expressed together last time, when she supported an amendment tabled in my name. She explained our difficulties with the clause.
	We must emphasise that we do not stand here pulling all these amendments out of the top of our heads—or at least, not usually. They are normally supported by groups of people relevant to the legislation. The Local Government Association is certainly concerned about the matter, as are a number of other bodies relevant to planning.
	Perhaps the Government do not understand—it may be more accurate to say that they are not prepared to understand—the importance that local government places on a planning authority having the final say on the contents of its own development plan document. That will have been prepared following detailed consultation, as the Minister rightly said, from the outset and representations. Although it must receive the inspector's scrutiny, it must be right that democratic autonomy should then be paramount concerning what is finally adopted as the plan.
	Accountability for the implementation of the documents lies with the democratically elected representatives in local government. We can blur that as we like with regional planning bodies made up of elected and non-elected people and with anyone else with a role to play in the preparation of the document, but, at the end of the day, the system of government in this country is still that the local level is democratically elected representation. That is where final decisions on the content of the development plan should lie.
	We must recognise, not least because we have had a battery of discussions on the matter during the course of the Bill, that the documents must be in general conformity—and we have heard the Government's interpretation of what "general conformity" as opposed to "conformity" means—with the regional spatial strategy. That is where we believe that there is room for a compromise over that whole delicate issue. Our amendments would require that the planning authority did not adopt the development plan document unless the inspector was satisfied that it was in general conformity with the regional spatial strategy. If it was not, the planning authority would have to comply with the regional spatial strategy.
	The Minister may say that that is evident in any event in Clause 23(1). However, to rely on Clause 23(1) to ensure that general conformity would mean that the parties end up in the High Court, which may be reluctant to interfere. So that may not be an ideal solution and the matter may be better dealt with by the amendment. General conformity with the regional spatial strategy would then be the only part of the development plan document over which the inspector had binding control by his comments. The local authority could then make the final decision on the local development documents, which will have caused the most interest and concern to the local population, following the inspector's comments. I hear what the Minister says about the areas in which he would be able to take up those comments.
	Whether or not my amendment or that of the noble Baroness is accepted, it would be incumbent on the Government to make provision in PPS12 for the inspector's report to be published in draft form, so that representations can be made on it. Again, that is a real problem. At present, a unitary development plan is open to the inspector's recommendations and an authority then responds to them. That does not resolve the problem that I am discussing because, at the end of the day, the local authority will want to make a decision, but it would at least be fair to ensure that there was some comeback.
	The Government's concern with speeding up the planning process could not be seriously hampered if my amendment was accepted. Indeed, we would argue that it would not be hampered if the previous amendment spoken to by the noble Baroness, Lady Hamwee, were agreed to. But speed is not everything in planning. Indeed, in some cases it is positively harmful. To end up with local development plans with which the local authority did not feel comfortable would fall into the category of harm.
	The development plan documents need to be acceptable to the community to which they refer. The amendment leaves control in the right place and for the right reasons.

Lord Rooker: My Lords, I am grateful for the way in which the noble Baronesses put their points. I cannot give all the examples—especially the worst cases, because they are probably the ones that will hit the desk of the Secretary of State—but I have four or five examples to put flesh on my point about delay.
	I want to make the position absolutely clear because, if one listened only to our debate today, one would think that the independent inspector is doing the local authority's job for it. He is not. The independent inspector is not there to do the job of local government; local government has its task to do.
	The noble Baroness, Lady Hamwee, said that local authorities should make the judgments, but it is local authorities that are making judgments about the policy proposals that go into the development plan, not the independent inspector. Local authorities then simply submit them for examination. The inspector will make a judgment on that plan only if the document is found to be unsound in some way. His judgment will be about what changes are needed to make the document sound. In many cases, he or she will refer back to the local authority or reconvene the examination. Some of the examples that I shall give in a moment will show that that is the case. The inspector is not there to perform the judgment about what goes in the plan to start with; that is up to the local authority.
	The noble Baroness, Lady Hanham, said that local authorities must have the final say, but it is quite clear that the previous administration was prepared to contemplate that not happening. The power of the Secretary of State to intervene is in the Town and Country Planning Act 1990. So governments of both parties have thought that there needs to be a reserve power concerning the final say; the issue is not new with this Government.
	I shall give a few examples of where there has been delay or prevarication—it depends on which side of the fence you are on as to what language you use. The first is Bromsgrove. That is an example of a long delay on a local plan where the authority took a long time to make difficult decisions, yet ended up with an outcome not very different from that which the inspector had first recommended. The inspector recommended in early 1997 that 230 hectares of land be safeguarded as areas of development restraint and the green belt boundaries being set properly for the first time to reflect that.
	Bromsgrove chose not to accept that recommendation and did nothing for the next five years. It eventually adopted the plan in 2004 with 158 hectares of development restraint land. If it had accepted the inspector's line in 1997, the plan would have been adopted a long time ago and review would already be complete, giving up-to-date policies. So there is a case of a long delay.
	In the case of Castle Morpeth, the public inquiry on the local plan was held in the summer of 1998 and the inspector's report was published in spring 1999. The inspector's report recommended rejection of a number of the housing policies relating to Morpeth, which was the main settlement in the district. The local authority was uncertain how to respond to the inspector's report and, for the next two years and more, planning policies were determined by a series of Section 78 appeal decisions. Proposed modifications were eventually published in July 2001; further modifications were published in April 2002; and the plan was finally adopted in March 2003. That is a fairly long delay.
	The example of Chester-le-Street is worth putting on the record. The inquiry commenced in September 1999, and the inspector's report was published in December 2000. The report did not recommend any difficult or controversial change to the plan. Despite that, it took the local planning authority 20 months to prepare proposed modifications, which were eventually published in July 2002. A further round of modifications was published in March 2003, and the council finally adopted the plan in October 2003.
	In Redbridge, a plan was deposited in mid-1999, and the inspector reported in October 2001. The inspector disagreed with the council's residential car-parking standard. The council did not want to set a maximum car-parking allowance for residential development as advocated in national planning policy. The inspector's report recommended that a maximum parking standard be added to the plan. The council did not accept the recommendation, and in its proposed modifications, which were not published until June 2002, sought to retain the policy unmodified.
	The Secretary of State objected at that point to the proposed modifications, on the basis of Planning Policy Guidance 3. After three sets of proposed modifications, the council accepted the argument and made the necessary changes. That took considerable time, and the plan was not finally adopted until November 2003. All that added some 15 months to the time taken to prepare the plan.
	I have other examples, but I shall not go over them, as the point has been made. There were no major, earth-shattering changes in any of the examples given, yet a good deal of time was lost. The average modification stage following an inspector's report takes six months to a year. The cases that I mentioned involved far longer delays.
	On Amendments Nos. 21C and 21D, we are surprised that the noble Baroness proposes a special provision on general conformity with the regional spatial strategy, as the Bench opposite has been opposed to the principle throughout. It now seems to have in mind that the inspector's report should be binding on matters of general conformity. We are not sure whether the amendment would work, given the discretion that the authorities would have under its first limb—I do not claim that those are technical grounds. For example, the inspector may recommend changes needed for general conformity, and the authority may include those changes in its development plan document, but it may at the same time make other changes that bring the development plan document out of general conformity in other ways. I remind the House that the inspector will recommend changes only where necessary because the evidence shows that a development plan document is not sound. The changes that he or she recommends will be only those needed to make the document sound. It is well worth repeating that.
	Under Amendment No. 21D, an authority could drop recommendations needed because the document failed one of the other important tests for soundness. The document may conflict with national planning policy or be unrealistic and impossible to implement. The proposal, therefore, is neither acceptable nor sensible. We do not think that we should single out one element, as the amendment would, on which the inspector's recommendations go ahead while ignoring other matters. We disagree that any community should face the uncertainty or delay about the plan for their area that some have experienced under the current arrangements—I have given examples. I am not making a great claim about the examples; they are not earth-shattering. We have several others, but I cannot bring them to the House, for the reasons that I have given.

Baroness Hamwee: My Lords, the noble Baroness, Lady Hanham, said that speed was not everything and that it could be harmful; I wholly agree.
	We have heard examples. My noble friend Lady Maddock has more than a little knowledge of Castle Morpeth, one of the authorities referred to. I understand that the new administration after elections, and after the events described followed by elections, got to grips with the position. Is not that the way for things to be changed?
	The Government have blanket arrangements for assessing and dealing with local authorities through the CPA process, yet we seem to be hearing that particular arrangements should be imposed on 450 minus 18, or whatever it may be, because of the bad examples. Hard cases make bad law; we should not make bad law. I should like to test the opinion of the House.

On Question, Whether the said amendment (No. 21B) shall be agreed to?
	Their Lordships divided: Contents, 92; Not-Contents, 125.

Resolved in the negative, and amendment disagreed to accordingly.
	[Amendment No. 21C not moved.]
	On Question, Motion agreed to.

LORDS AMENDMENT NO. 22

22 Page 13, line 19, at end insert—
	"( ) any recommendations made by the person appointed to carry out the independent examination of the document." The Commons disagree to this Amendment for the following Reason—
	22A Because it is not consistent with measures to speed up the plan making process.

LORDS AMENDMENT NO. 23

23 Page 13, line 20, leave out subsections (2) to (4)
	The Commons disagree to this Amendment for the following Reason—
	23A Because it is not consistent with measures to speed up the plan making process.

Lord Rooker: My Lords, I beg to move that the House do not insist on its Amendments Nos. 22 and 23 to which the Commons have disagreed for their reasons numbered 22A and 23A. I have spoken to these amendments along with Amendment No. 21. I beg to move.
	Moved, That the House do not insist on its Amendments Nos. 22 and 23, to which the Commons have disagreed for their reasons numbered 22A and 23A.—(Lord Rooker.)

On Question, Motion agreed to.

LORDS AMENDMENT NO. 26

26 Clause 37, page 20, line 28, at end insert—
	"( ) For the purposes of any area in Greater London, the development plan prior to the publication by the Mayor of London of a new spatial development strategy in accordance with section 341(1)(b) of the Greater London Authority Act 1999 (c. 29) (alteration or replacement) is the unitary development plan adopted in accordance with the principal Act." The Commons disagree to this amendment for the following reason—
	26A Because it is not appropriate to make such provision.

LORDS AMENDMENT NO. 27

27 Page 20, line 29, at beginning insert "Thereafter,"
	The Commons disagree to this amendment for the following reason—
	27A Because it is not appropriate to make such provision.

Lord Rooker: My Lords, I beg to move that the House do not insist on its Amendments Nos. 26 and 27 to which the Commons have disagreed for their reasons numbered 26A and 27A.
	These amendments have been a focus for some concerns about the new planning process in London. I am pleased that following assurances that we have given, the amendments were not pursued in the other place. In no particular order, the concerns were, for example, about the following matters: whether the Mayor could intervene in a London borough's unitary development plans. The Mayor does not have the power to do so under the current legislation, and nothing in this Bill changes that.
	The other issue is what powers the Mayor has on planning applications in London. He can direct refusal of strategic planning applications. The definition of "strategic" is in circular 1/2000, which sets out the arrangements for strategic planning in London. On the relationship between the London plan and the boroughs' plans, I have repeated in this House a Statement by the Minister for Housing and Planning on our policy on general conformity. The key point is that this is a test of "general conformity", not conformity. It is only where an inconsistency or omission in a borough unitary development plan, or in the future a local development document, would cause significant harm to the implementation of the London plan that it should be considered not to be in general conformity.
	Another issue is whether determining planning applications in London would become much more complicated and expensive. It will not. The London plan will be a factor when an application raises strategic issues that are covered by policies in it. Many applications will not raise strategic issues, and it should be reasonably straightforward, in the case of those that do, to give the appropriate weight to strategic and local planning policies. I beg to move.
	Moved, That the House do not insist on its Amendments Nos. 26 and 27, to which the Commons have disagreed for their reasons numbered 26A and 27A.—(Lord Rooker.)

Baroness Hamwee: My Lords, I noted in the written Statement and the debate in the House of Commons, and particularly the explanation that the Minister has just repeated, that it is only where there is an inconsistency or omission in a unitary development plan that would "cause significant harm" to the spatial development strategy that the unitary development plan should be considered not to be in general conformity.
	I assume—I hope that I can assume—that the Mayor's guidance on general conformity, which has just finished a consultation period, will have to be in its final form such that it reproduces those words, "significant harm". I do not know whether the Minister can comment on that today.
	The explanations did not address the point made when the Bill was last in this House; namely, that the spatial development strategy should not achieve the status or relationship given it by the Bill until its first revision. That is not out of any desire to make mischief, nor anything other than to avoid the confusion to which I referred at Report stage.
	However, I note that the Government have not agreed with my analysis, or that of the boroughs which expressed their concerns and prompted me. Indeed, your Lordships may have seen the letter from Michael Snyder, chair of policy and resources at the City Corporation, which also expressed concern about the arrangements that the Bill would put in place. Given that the Government have not taken the point but have clarified the interpretation of general conformity and have made the point about significant harm, I do not intend to press the matter further.

Baroness Hanham: My Lords, I do not want to add much to what the noble Baroness, Lady Hamwee, said. We supported each other on this amendment at the previous stage. The concern, if any, that still remains is the question of the lining up or the timescaling of the need to conform borough plans with the Mayor's strategy. From the outset, the whole argument was that the Mayor's strategy has been set after the boroughs have completed their unitary development plans, when they did not even know that they were going to have to comply at some stage with a regional spatial strategy set by the Mayor. Therefore, it is inconceivable that every policy within those would be even in general conformity with the Mayor's strategy. The questions are: at what stage will it be sorted out and who will sort it out if there is a conflict of interest?
	If the Minister can reassure us further on that, the matter may not need to go any further. But that is the problem. It may be that there is a problem with all the regional spatial strategies, but it seems to be more germane in London where the London Plan has far wider connotations than in the other regional spatial strategies, as indicated under the Bill. The fact that the London Plan is much wider in its scope than the other regional spatial strategies and the fact that the boroughs' plans were set before the Mayor's strategy was devised are causing the problem. That suggests that it would be sensible to allow one stage and a revision in order that the boroughs could bring that conformity into the London Plan. Indeed, it may be that the London Plan needs to be looked at to determine whether it needs to conform with the regional spatial strategies, as laid out in this Bill. There is a mismatch somewhere here that needs the Minister's constructive thought.

Lord Rooker: My Lords, I do not want to repeat the statement made by the Minister. Obviously, that is a matter of record now. However, I have three further paragraphs to put on the record. This is an area on which I have no expertise whatever. Perhaps I may make that absolutely clear. I shall therefore stick to the words on the brief. I hope that these three paragraphs may go some way to allaying the fears expressed by both noble Baronesses.
	We have considered the Mayor's draft guidance on general conformity and have responded to it identifying those areas where the drafting of the Mayor's consultation document does not reflect the Secretary of State's policy on general conformity.
	There are examples of issues related to the London Plan being insufficiently strategic. Obviously, that has been subject to panel examination. The panel concluded, for example, that policies 3A.9 and 3A.10 in the draft London Plan, requiring boroughs to adopt policies detailing requirements for off-site provision of affordable housing or payments in lieu, were insufficiently strategic. They are not included in the final published version of the plan.
	There is an issue relating to giving the London Plan the status of a development plan. Although the change in status would not make a big difference, we think that the change is important for two reasons. First, there is no logical reason for treating the London Plan differently from regional spatial strategies for other regions, which would also initially be based on documents that predated this legislation. Secondly, we would not wish to send a message that the existing London Plan or the strategy that it sets out is in any way of reduced status. The plan is an important document that the Government believe has a key role in planning the future of London.
	I hope that those three paragraphs might touch on the points raised by the noble Baronesses and go some way to reassuring them.

Baroness Hanham: My Lords, before the Minister sits down, I should like to say that they do touch on it. But I do not think that they answer the point about the fact that the London Plan has a much wider scope than the regional spatial strategies will have. One concern is that London will be doing something different from other parts of the country in relation to planning authorities and the regional spatial strategy. I cannot see why London boroughs should have to respond to a plan that is wider than any other spatial strategy.

Lord Rooker: My Lords, from the Dispatch Box, I do not know the technical answer to that. However, I cannot help but point out that of all the regions in the country, only London has an elected authority. Look: the noble Lord is nodding. He knows what I am on about.

Baroness Hanham: My Lords, I realise that we cannot do this at this stage of the Bill. We cannot keep bouncing backwards and forwards. Of course, that is correct if there are any other regions, but they will not have the same regional spatial strategy or the same form of regional spatial strategy as in London. That is the point; it is not the elected authority point.

Lord Rooker: My Lords, it comes down to that because, as I said in the points that I just read out, the initial regional spatial strategies will be based on documents that pre-date this legislation. Clearly, the London Plan pre-dates this legislation. But the London Plan has come from an elected planning authority. The noble Baroness made a point about the boroughs and the plan, and I noticed that the noble Lord, Lord Hanningfield, was nodding vigorously at what I said. They may not like elected regional planning authorities, but in London we have one.

Baroness Hanham: My Lords, we have an elected mayor. It is his plan. The Minister needs to go back to the legislation and recall that it is the Mayor's plan and not that of the assembly.

On Question, Motion agreed to.

LORDS AMENDMENT

41 Page 31, line 14, at end insert—
	"( ) Any planning application that the Secretary of State declares is of national or regional importance, as designated through subsection (1), must be subject to an economic impact report.
	( ) Any planning application for a major infrastructure project based on a site-specific proposal in a national policy statement White Paper shall be considered by an inspector who shall be able to question the need for a specific development." The Commons disagree to this amendment for the following reason—
	41A Because it is not appropriate to make such provisions.

Lord Rooker: rose to move that the House do not insist on its Amendment No. 41 to which the Commons have disagreed for their reason numbered 41A, but do propose Amendment No. 41C in lieu thereof:
	41CPage 31, line 26, at end insert—
	"(4A) If the Secretary of State gives a direction under subsection (2) the applicant must prepare an economic impact report which must—
	(a) be in such form and contain such matter as is prescribed by development order;
	(b) be submitted to the Secretary of State in accordance with such provision as is so prescribed.
	(4B) For the purposes of subsection (4A) the Secretary of State may, by development order, prescribe such requirements as to publicity and notice as he thinks appropriate."

Lord Rooker: My Lords, I beg to move that the House do not insist on its Amendment No. 41 to which the Commons have disagreed for their reason numbered 41A, but do propose Amendment No. 41C in lieu thereof.
	The Government initially resisted the tabled amendment on the basis that the amendments were not required in the Bill. In dealing with amendments on economic impact and major infrastructure projects, the resistance was not because the Government were against the amendment in principle. I hope that I made that clear at the time.
	The first subsection of the amendment tabled by the noble Lord, Lord Hanningfield, required an economic impact report to be completed in relation to an application that has been designated as a major infrastructure project by the Secretary of State.
	The Government have always been clear that they would expect the promoter of a development of the type which the Secretary of State is likely to declare a major infrastructure project, that is, of national or regional importance, to engage with all parties concerned at as early a stage as possible. It is expected that some form of economic impact assessment or report will have been completed in preparation for the application in much the same way that it is expected that an environmental impact assessment or statement will have been prepared. It will be well in advance of the stage at which the amendment would envisage this happening.
	It is only at the application stage that the Secretary of State will be able to declare that he thinks the application is of national or regional importance and should therefore be called in rather than left to the local planning authority to deal with. However, as the work assessing the economic impacts of the proposed development should already have been undertaken at the point at which the Secretary of State makes his decision as to whether the application should be called in, there is no reason why the requirement for an economic impact report cannot be included in the Bill.
	The alternative amendment which has been tabled provides for the Secretary of State to prescribe the form and content of the report. He can also prescribe how and when the report is to be submitted to him, and the publicity requirements. The intention will be to avoid dispute over what constitutes an economic impact report, to ensure that it is submitted in good time in order to avoid lengthening the inquiry process, and to ensure that so far as possible the public are informed of its content.
	The second subsection of the amendment tabled by the noble Lord, Lord Hanningfield, would require any planning application for a major infrastructure project based on a site-specific proposal in a White Paper to be considered by an inspector who could question whether the specific development was necessary. I have to say that the Government continue to resist this proposal because there is no need for a legislative provision in order to enable an inspector to be able to question whether a specific development is necessary, which is what I think is at the heart of the amendment. I accept that what was being argued was along the lines of, "You are more or less taking away from the inquiry whether we should have this in the first place and saying simply, 'We are going to have it. What are the nuts and bolts aspects?'". We were not quite putting it like that.
	Throughout the progress of the Bill, the Government's stated position has been that where there is a national policy statement White Paper, it will help to reduce the argument at a planning inquiry—not obliterate or eliminate it—about the need for a specific development on a particular site. It has never been the Government's intention to rule out the possibility that the inspector will spend some time looking at need, but this will be done in the context of what is said about need in the national policy statement.
	The Government's position is not contrary to the principle behind the second subsection of the amendment, but legislative provision to enable an inspector to consider the issue of need is unnecessary. I hope that I have made it clear: the issue of need will be open for question by the inspector, but the point about the national policy statement in a White Paper is that it could reduce the scale of the argument. Obviously we have based much of this on what happened over Terminal 5.
	Although the noble Lord may wish to do so, I do not want to get bogged down in the issue of the recent aviation White Paper. As I said in the debate on Report, the White Paper sets out the Government's strategic framework for airport capacity over the next 30 years. It does not authorise or preclude any particular development, but sets out a policy framework against which the relevant public bodies can plan ahead. That is the point of it.
	I hope that what I have been able to say has been much more precise than what I was able to say when we considered the earlier amendments, and that it will find favour not only with the noble Lord, Lord Hanningfield, as the original proposer, but with the whole House.
	Moved that the House do not insist on its Amendment No. 41, to which the Commons have disagreed for their reason numbered 41A, but do propose Amendment No. 41C in lieu thereof.—(Lord Rooker.)

Lord Hanningfield: rose to move Amendment No. 41D, as an amendment to the Motion that the House do not insist on its Amendment No. 41 to which the Commons have disagreed for their reason numbered 41A, but do propose Amendment No. 41C in lieu thereof, leave out "41C" and insert "41E".
	41EPage 31, line 14, at end insert— "( )Any planning application for a major infrastructure project based on a site-specific proposal in a national policy statement White Paper shall be considered by an inspector who shall be able to question the need for a specific development."

Lord Hanningfield: My Lords, I thank the noble Lord, Lord Rooker, for those comments, and I thank him and the Government for tabling their amendment. At least we have won half of our amendment, for which I am grateful. It means that during the course of our discussion of the Bill in this House, the Government have listened to the argument in this area, one that is obviously contentious, in particular in my own county because of the development of Stansted airport. Therefore, as I have said, I thank the Government for tabling their amendment, which we shall accept.
	However, I should like to speak to my new amendment, Amendment No. 41E. While I am grateful to the Minister for his comments on the inquiry process, I think that certain areas need clarification. We all accept that no one wants to see inquiries of the kind conducted for Terminal 5 at Heathrow. It went on for years and caused a lot of uncertainty and disruption. Waiting such a long time for a decision does not help either local communities or airports.
	One also accepts that governments of all kinds have policies and that, once stated, those policies are debated and conclusions reached. But what is paramount is the need for people to have confidence in a local inquiry. They must be able to put all the issues relating to the development at such an inquiry. We have discussed many times during the course of this Bill the fact that, unfortunately, despite some modifications, there is going to be only one planner in this country. That will be the Deputy Prime Minister. If he decides that there is to be an airport, then that is it. One wants to be confident enough in the system to be certain that local people will have the right to question both the need for, say, the new runway at Stansted, and the actual positioning of it. I say that because such concerns deeply affect the surrounding communities. Aircraft noise is only one consideration. One wants to make certain that inquiries fulfil the legitimate democratic process. People, whether local or industry representatives, must feel that they can go to a local inquiry and put their arguments forward in the knowledge that those points will be properly considered.
	I would still like to see such a provision on the face of the Bill. It would give a reassurance that local democracy does still exist. We need to know that local councils can question the need for, the siting of and so forth of a runway or any other major project affecting thousands and sometimes hundreds of thousands of people's homes and livelihoods. These truly big issues must be dealt with openly—even after the Government have set out their policy.
	I appreciate what the Minister has had to say and I am glad that it is on the record. However, perhaps he will be able to say a little more about the democratic nature of inquiries and the ability of the inspector to have a free hand in looking at all the issues relating to a major infrastructure project.
	Moved, as an amendment to the Motion that the House do not insist on its Amendment No. 41 to which the Commons have disagreed for their reason numbered 41A, but do propose Amendment No. 41C in lieu thereof, leave out "41C" and insert "41E".—(Lord Hanningfield.)

Lord Rooker: My Lords, I do not have anything further to say. Although I do not want to sound nitpicking, I shall refer again to my original notes and cross-check those against the wording of Amendment No. 41E, to which the noble Lord has just been speaking. We are not talking about the same thing. Amendment No. 41E deals with a,
	"planning application for a major infrastructure project based on a site-specific proposal in a national policy statement White Paper".
	I am no expert on the aviation White Paper, but I can only repeat what I have said. The recent White Paper sets out the development of airport capacity in the UK for the next 30 years. It does not authorise or preclude any particular development. Moreover, I have already made the point that even if it was site-specific, the inspector would still be able to question the need, which is the purpose behind Amendment No. 41E.

Lord Hanningfield: My Lords, I do not want to debate that White Paper today but it gives a specific site and specific positioning for a second runway at Stansted airport. There is a specific site named in the White Paper.

Lord Rooker: My Lords, I accept that. I am not arguing what the pronouncement was—the answer to the question for which everyone had waited for three years was "Stansted"—but the White Paper did not authorise Stansted. Let me make it absolutely clear that the White Paper did not authorise the expansion of Stansted. People think, "The Government have published a White Paper—boom—this is going to happen", but a process has to be followed.
	As I have said, the inspector will be able to question the need. Under the new procedure in the Bill, we hope to be able to reduce the amount of time spent on the need argument before one gets down to the nuts and bolts. That is what we are seeking to do and it would not be fruitful for me to debate the pros and cons of the aviation White Paper. I am not seeking to nit-pick the amendment. I am making the point that the White Paper does not authorise the expansion at Stansted.

Lord Hanningfield: My Lords, I thank the Minister for that reply. I shall not pursue the amendment further today. What he has said is on the record and one hopes that any potential future inquiries into large projects will proceed exactly as he has said they will. We shall be watching what happens. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	On Question, Motion agreed to.

LORDS AMENDMENT

42Leave out Clause 45
	The Commons disagree to this amendment for the following reason—
	42A Because it will prevent the more speedy creation of simplified planning zones.

Lord Rooker: My Lords, I beg to move that the House do not insist on its Amendment No. 42 to which the Commons have disagreed for their reason numbered 42A. I shall speak also to Lords Amendments Nos. 130 and 139. The three amendments seek the removal of all reference to simplified planning zones in both the Bill and the Town and Country Planning Act 1990.
	I shall take the amendments in turn. Amendment No. 42 proposes the deletion of Clause 45 from the Bill. The Commons disagree because this,
	"would prevent the more speedy creation of simplified planning zones".
	Amendment No. 130 proposes amendments to Schedule 6 that would delete all reference to simplified planning zones from the Town and Country Planning Act 1990. The Commons disagree because it would not be,
	"appropriate to abolish simplified planning zones".
	Amendment No. 139 proposes an amendment to Schedule 9 with the effect that Section 83(1) of the Town and Country Planning Act 1990 would not be repealed as is currently suggested in the Bill. The Commons disagree to this because it is,
	"not appropriate to retain the existing arrangements for the creation of simplified planning zones".
	Clause 45 seeks to amend the existing provisions for the creation of simplified planning zones to enable the implementation of business planning zones. These will be fully defined in subsequent policy statements, most likely the forthcoming policy planning statement 4, Planning for Economic Development, which is due to be published later this year.
	Broadly speaking, however, business planning zones are as previously described: flexible planning regimes, responsive to the needs of business. They are a strategic tool, to be identified at the regional level and implemented at the local level. We expect them to be used to encourage the development of high quality, high tech business, perhaps in the form of clusters. We will expect regional planning bodies to look at promoting one or two of these only in each region. They will be a valuable tool for encouraging investment and therefore growth and regeneration.
	Business planning zone developments will be of a high standard. This is something that we will require through subsequent policy statements. They will have a low environmental impact and will be required to undergo environmental impact assessment. They will, of course, be subject to public consultation, both at the regional level, when the broad locations for business planning zones will be identified, and at the local level as they are implemented.
	The new business planning zones will be very different from the current special planning zones, both conceptually, as already described, and technically. The key differences proposed by Clause 45 are as follows. The new special planning zones cannot be made by a local planning authority unless the need for one has first been identified in the regional spatial strategy or, in the case of London, the special development strategy, or by the National Assembly for Wales. The life span of a special planning zone may be varied to respond to the specific demands of an area and be for any period up to 10 years, rather than a fixed 10 years as is currently the case.
	The business planning zones are an improvement on their predecessors. They will provide a new, useful and flexible strategic tool and will support business development. They should be supported. I regret that I cannot read out a list of all the people clamouring for them because I have not got one in my notes. I ask the House not to insist on its amendment.
	Moved, That the House do not insist on its Amendment No. 42 to which the Commons have disagreed for their reason numbered 42A.—(Lord Rooker.)

Baroness Hanham: rose to move Amendment No. 42B, as an amendment to the Motion that this House do not insist on its Amendment No. 42 to which the Commons have disagreed for their reason numbered 42A, leave out "not".

Baroness Hanham: My Lords, I suspect that the reason why the Minister has not got a list of people clamouring for these business planning zones is because there are none. When we discussed this issue at Third Reading I thought that the Minister was less enthusiastic over the provisions in Clause 45 than any other part of the Bill. There may be not only a lack of enthusiasm from the Minister—for which, I am sure, he has now been clouted round the head—but a lack of enthusiasm from business itself. In reality, for years there have been business planning zones, simplified planning zones and business enterprise zones, and they have not taken off.
	The House would expect me to be concerned about a second aspect of this issue—that is, the fact that these zones will be identified in the regional spatial strategy. It is another name—or misnomer—for the Secretary of State deciding where business development will take place, alongside where housing will be built under the spatial strategies and the sustainable community plans.
	As I said before, this is an unloved provision—not even business sees any particular virtue in it. It is not unique—it has been around before—and we ought to take the opportunity with this Bill to put it out of its misery; to take it out of these provisions, to take it out of the latest town and country planning Bill and to dump what is clearly not a very successful project. I beg to move.
	Moved, as an amendment to the Motion that this House do not insist on its Amendment No. 42 to which the Commons have disagreed for their reason numbered 42A, leave out "not".—(Baroness Hanham.)

Baroness Hamwee: My Lords, some Ministers leave a great many gaps between the lines for us to read into. Perhaps that is what the Minister has done in his final paragraph. Certainly at the previous stage he clearly filled in the gaps.
	We still have not had it spelled out how business planning zones will facilitate "high quality" business schemes. As for "high tech", which is part of the same mantra, I remain puzzled. I continue to think that the local planning authority may have the scope to use the new local development orders to achieve high tech business parks or whatever; they seem to be ideal for that purpose. But as to whether we need simplified planning zones or the change in provisions brought about by the Bill to achieve this, I am no more convinced than when we started debating the issue.
	The root of the provision does not seem to be the Minister's department. We all recall that the planning reforms were heralded originally by the Chancellor of the Exchequer, on the basis that planning was thought to hinder competitiveness, although there is no evidence of that. I support the noble Baroness entirely; we ought to let this die the death it is headed for.

Lord Rooker: My Lords, I have nothing to say in answer. The business planning zones are a vital part of the Bill. It is not a confidence issue.

Baroness Hanham: My Lords, I wish I felt moved to say that I was going to press the amendment to a vote, because I might win it, with the Minister voting with me. I shall not do so today; I think this will die its own death. It is unfortunate that we will have in legislation something that is completely useless and will cause justifiable grievance, without having particular merit. We have tested this out—we have talked round it and through it. I think I could move the Minister substantially in our direction, although I doubt whether that applies to his colleagues behind him. However, for today, I will leave the matter alone. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	On Question, Motion agreed to.

LORDS AMENDMENT

45 Insert the following new Clause—

"Duration of planning permission and consent

(1) Section 91 of the principal Act (limit on duration of planning permission) is amended by inserting at the end of subsection (2) the words "and any other matters which the authority consider relevant".
	(2) Section 18 of the listed buildings Act (limit of duration of consent) is amended by inserting at the end of subsection (1)(b) the words "and any other matters which the authority consider relevant"." The Commons disagree to this amendment for the following reason—
	45A Because it is not necessary to make the provision to which the Lords amendment relates.

Lord Rooker: My Lords, I beg to move that the House do not insist on its Amendment No. 45, to which the Commons have disagreed for their reason numbered 45A. In moving the Motion, I shall also speak to Amendments Nos. 46 and 47.
	I recall that at earlier stages of the Bill's passage—I am not sure whether it was Report or Second Reading—the noble Baroness, Lady Hamwee, moved Amendment No. 45 to address the concerns that when a local planning authority considered the length of time that a planning application should remain valid, it should not consider such matters as the length of time it takes to assemble the site and organise funding. The noble Baroness intended the amendment to be helpful in the context of a three-year default period for the duration of a permission or consent. Section 91(2) of the Town and Country Planning Act 1990 and Section 18(1)(b) of the Planning (Listed Buildings and Conservation Areas) Act 1990 require the local planning authority to consider "any other material considerations". If a local planning authority, when considering the time needed for a planning permission, thinks that the time needed to assemble finance and land is relevant, that matter will be a material consideration to which the authority must have regard. The amendment is therefore not necessary.
	Amendments Nos. 46 and 47 would leave out the provisions making the default period for the duration of planning permission and listed building consent three years. The Government proposed with Clause 50 to reduce the period of validity of a planning permission, listed building consent or conservation area consent from five to three years. Local planning authorities will be able to agree longer periods than three years where appropriate—for example, in complex regeneration projects. There is a right of appeal to the Secretary of State.
	The clause also prevents a developer seeking to extend a permission by submitting an application to vary a condition. Any developer wishing to extend the time limit will have to submit a new application for planning permission, and the local planning authority will consider the entire application afresh.
	Reducing the default period for permission and consent from five to three years is a crucial part of our agenda to speed up the operation of the planning system. The default period refers to the time limit for the commencement of development. A three-year default sends a clear signal about the importance of delivery. We are, of course, pressing local authorities to speed up their planning processes, and we are showing an even-handed approach towards developers with a three-year default period.
	We know that circumstances can change, and a three-year default period will allow changes to national guidance to take effect more quickly. We previously introduced an amendment providing that where planning permission is granted and that grant of permission is subsequently challenged in judicial review proceedings, the duration of permission will be from the date of the grant until three years—or other period as directed by the determining authority—after the completion of the proceedings. That amendment was inserted in response to concerns raised by developers that the shorter validity period, coupled with the associated removal of the provision that enabled developers to seek to extend the life of the consent, could mean that the validity period had expired before the judicial review proceedings had been completed. I accept that that would be complete nonsense.
	During your Lordships' earlier consideration of the clause, it was argued that even expert lawyers would find it difficult to calculate when judicial review proceedings were concluded. We have been persuaded by that argument and have tabled amendments to deal with the issue.
	Commons Amendment No. 46A in lieu of Amendment No. 46 provides that, where a planning permission is granted subject to a time limit by virtue of a condition imposed under Section 91 of the Town and Country Planning Act 1990 or, by virtue of Section 91(3), as amended in each case, and the grant or deemed grant of that planning permission is challenged, the period is statutorily increased by one year in relation to that permission. Commons Amendment No. 47A in lieu of Amendment No. 47 makes a similar change in relation to the Planning (Listed Buildings and Conservation Areas) Act 1990.
	The Government have listened to criticism during the consideration of the clause, as indeed we have during consideration of the whole Bill. We have proposed amendments to deal with problems arising from legal challenge. However, a three-year default period for planning permission is a central part of the programme for speeding up the operation of the planning system.
	During consideration of your Lordships' amendments in the other place on 19 April, the spokesperson for the Liberal Democrats expressed sympathy with the Government's proposal to change the default period for planning permission from five years to three. He took the view that planning officers might not know that they could vary the period. He proposed that the Government should make it clear that local authorities could vary the period and that longer periods should be allowed, for example, for complex applications.
	The Government have listened to that argument, and the Minister for Housing and Planning has today published a statement that makes it clear that the current flexibility to vary the length of permission or consent will remain. The statement notes that the time limit for commencement of development will normally be three years from the date of permission or consent, but a local authority may direct a longer or shorter period, as it considers appropriate.
	The statement says that local planning authorities should look favourably on requests for longer periods of duration where there are valid planning grounds for such a request. There will be cases in which three years is unlikely to be long enough to allow developers to complete all the preparation needed before starting work. Longer periods are likely to be appropriate, as I have already said, in complex regeneration projects, for example.
	The statement also notes that after the Planning and Compulsory Purchase Bill has completed its parliamentary passage, the Government will issue guidance to local planning authorities on the new provisions. In that guidance, we will make clear the need for flexibility on the part of local authorities in their dealings with applicants on the duration of permissions and consents.
	I hope that is considered to be reasonable. It certainly meets the points that have been made in this House and in the other place during the Bill's passage. We have listened and have tried to be practical where we can, while keeping the central message that there has to be some change.
	Moved, That the House do not insist on its Amendment No. 45, to which the Commons have disagreed for their reason numbered 45A.—(Lord Rooker.)

Baroness Hamwee: rose to move Amendment No. 45B, as an amendment to the Motion that the House do not insist on its Amendment No. 45 to which the Commons have disagreed for their reason numbered 45A, leave out "not".

Baroness Hamwee: My Lords in speaking to Amendment No. 45B, I shall speak also to Amendments Nos. 46B and 47B. Amendment No. 46B is slightly defective. Any defect is significant at this stage but, as the Minister says, I am reading out what it says on the Marshalled List, so I had better stick to what it says. It should read,
	"as an amendment to the Motion now before the House to leave out from "House" to the end and insert "do insist on its Amendment No. 46".
	When I phoned the Public Bill Office last week to ask for guidance in drafting, they said, "It's very complicated, my Lady—you tell us what you want to do and leave it to us to draft it".
	We do not at all take issue with the Government's objective of actually seeing the end product of the plans for much needed housing, or of achieving a very high percentage on brownfield land. The issues that we considered in the previous debate related to the length of the default period and to what the local planning authority can have regard in extending, or indeed shortening, that default period.
	Most householder applications can be taken through to completion within three years—the side extension, the conservatory and so on. We talked at Report about the need to give sufficient time for an individual to get organised. I do not want to make things difficult for individuals, but I do not believe that that is the central issue. The issue is about achieving the significant developments.
	The recent Barker review, which we shall debate in a couple of weeks' time, thanks to the noble Lord, Lord Lucas, identifies as a factor that the housebuilding industry's response to risk and the speculative nature of land leads to reluctance to build out large sites quickly. However, that is only one of five factors that are identified. The review talks of the increasingly complex nature of sites, especially brownfield sites, where significant remediation is required; the difficulties of site assembly, where ownership is fragmented; the planning system, its influence over the amount of land available, and whether the infrastructure is there to support the development; and the politically contentious nature of land use. However, the review has found little evidence, at least across the country as a whole,
	"to substantiate concerns that option contracts and the practice of land banking allow housebuilders to erect barriers to entry into the market".
	The difficulties of site assembly, obtaining funding and dealing with contamination resulted in my being concerned about the reduction of the default period. I welcome the statement made today about site assembly and funding being capable of being regarded as material considerations. I should like to have heard that whatever the local planning authority believes is relevant is de facto relevant.
	The other issue expressed to us as a concern by the industry related to obtaining consents from other agencies, such as the Highways Agency, the water authorities, the Environment Agency, English Heritage and English Nature. I would be glad to be corrected, but it does not appear to me that obtaining those consents would fall within what could be considered as material considerations.
	I acknowledge the Government's amendment in response to concerns about how to calculate when a period starts running in the event of judicial review. However, that is not quite the end of the matter—nor, perhaps, is guidance, unless the new proposed guidance is very strong. We are waiting to see what it is like. Your Lordships may have received letters from the various industry organisations on that matter.
	I share the concern that in practice local planning authorities will follow the statutory period and impose three years. I hope that what the Government do following these debates will mean that, if one told a planning officer that it was possible to vary the default period, the answer would not be, "Not a lot of people know that". I hope that these debates will have brought that out very fully into the open. Clearly the industry's concern, which I have shared because I share the Government's own objective, still remains. I beg to move.
	Moved, as an amendment to the Motion that this House do not insist on its Amendment No. 45 to which the Commons have disagreed for their reason numbered 45A, leave out "not".—(Baroness Hamwee.)

Baroness Hanham: My Lords, I have an amendment within this short group, which provides what I hope is the spectacular and usual British comprise. Instead of "three years", we have moved to "four". There has been great concern about the matter, although not for the smaller scale application. We are not talking about the length of time taken over planning permission for a small-scale development, although, having said that, a long period in that regard can sometimes sterilise what happens to a property. We are talking about the larger developments. There has been great concern that if the five-year duration was not to be adhered to, three years was far too short a time to deal with all the problems that might be associated with a larger site, as the noble Baroness, Lady Hamwee, said.
	I note the Minister's amendment, but it will help only in an extreme case, when judicial review has been implemented. It does not really take us very far. The applications in question, relating to something more than a small domestic extension, probably amount to about 20 per cent of any local authority's applications.
	The Minister says all the time that the whole purpose of the Bill is to speed up the planning process. However, it represents a serious slowing down of the process if a developer who gets to the end of the three years for a development of 50 or 200 houses on a brownfield site and is not quite ready has to put in a whole new planning application. If at the outset he is told that he can have a longer time if necessary, the issue may be resolved. But if he comes up to the end of the three-year period and is not ready to go and has to put in a new application, timescales will move forward in any event.
	It is also true that when an application for renewal is considered, it is not exactly a fresh application or a fresh field. I have recently had this experience as a member of a planning authority. A material consideration for the planning committee is whether or not approval was given. It is a different hearing from a hearing in consideration of a fresh application. All that can take extra time.
	Four years is certainly not three years and certainly not five years, but it would represent a half-way house. It would give more time for major developers to bring their plans to fruition and, perhaps, ensure that it was not necessary for them to put in a new application because they might complete the process within that time.
	I hope that this amendment is helpful, in the context of a vexed situation over the length of planning permissions—vexed for the local authority and for any developer trying to assemble a site and introduce something that is not entirely straightforward or run of the mill.

Lord Lucas: My Lords, I am disappointed that the Government should have chosen not to accept the amendments on this matter. It seems to me that the Barker review demonstrated quite clearly that there is no evil that needs dealing with and that by and large sites are built out as soon as they reasonably may be given all the problems of putting them together and the commercial considerations surrounding the site, and that there is no delay that needs dealing with. All the Government are doing is, I think, creating potential for chaos in a small number of cases and inconveniencing many. It saddens me that the Government should have come back on this but unless my noble friend or the noble Baroness, Lady Hamwee, jumps up and calls us to a Division, I suspect that I shall have to put up with it.

Lord Rooker: My Lords, the noble Lord should not be so sad as he sounds. Anyone would think that the Government had not moved on the matter. The other place has put amendments before your Lordships' House, to which it seeks your Lordships' agreement, that show considerable movement. The statement by the Minister also shows movement. It is quite clear that if a development is perceived to need a period of four years or five years, it will get it. The relevant issues are debated beforehand so there is a degree of certainty there.
	The noble Baroness, Lady Hamwee, made a fair point about the agencies and the other bodies. They are a law unto themselves but they are statutory bodies—that is why they are a law unto themselves. I hope that I can answer her question in that regard. If when considering the duration of time needed for a planning permission a local planning authority thinks that the time needed to assemble the finance and the land and to consult other bodies is relevant, that matter will be a material consideration to which the authority must have regard. In other words, the "other bodies" will cover the agencies plus other relevant bodies in addition to those that the noble Baroness mentioned. A matter can be considered a material consideration. I think that is the central question that the noble Baroness asked me.
	I believe that we have a good compromise. The flexible three-year period is almost like flexible retirement. One thing is certain—it is not a rigid three-year period. That was made absolutely clear in the statement made following the points raised in the other place. The three-year period is flexible. It is a default three-year period as opposed to a five-year period; we want to speed up the process. The flexible three-year period should not give developers any problems whatever. Even at this final stage of the Bill the Government have tried to compromise, as we ever seek to do when listening to reasonable arguments. We have a compromise here. I repeat that the three-year period is flexible, not rigid. If it started out as a rigid three-year period, I apologise. There was always a degree of flexibility there, but I do not suppose that we highlighted that as we should have done.

Baroness Hamwee: My Lords, it is clearly important that the Government are making the position clear to the planning and development community, if I can call it that. Issuing new guidance is important but it does not change things. I do not want to sound too scratchy as I welcome what the Government are doing, but I do not think that the Minister can quite claim that they have moved in the way that he suggested. The Government are clarifying the 1990 Act. Welcome as that clarification will be, we know that concerns remain. I would not like to deprive the noble Lord, Lord Lucas, of the opportunity to express his view because I should like to express mine. I should like finally to test the opinion of the House.

On Question, Whether the said amendment (No. 45B) shall be agreed to?
	Their Lordships divided: Contents, 87; Not-Contents, 114.

Resolved in the negative, and amendment disagreed to accordingly.
	On Question, Motion agreed to.

LORDS AMENDMENT

46 Page 38, line 14, leave out subsections (1) and (2)
	The Commons disagree to this Amendment but propose the following Amendment in lieu—
	46A Page 38, leave out lines 19 to 39 and insert—
	""(3A) Subsection (3B) applies if any proceedings are begun to challenge the validity of a grant of planning permission or of a deemed grant of planning permission.
	(3B) The period before the end of which the development to which the planning permission relates is required to be begun in pursuance of subsection (1) or (3) must be taken to be extended by one year.""

Lord Rooker: My Lords, I beg to move that the House do not insist on its Amendment No. 46 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 46A in lieu thereof. I have spoken to the amendment.
	Moved, That the House do not insist on its Amendment No. 46 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 46A in lieu thereof.—(Lord Rooker.)

[Amendments Nos. 46B to 46F not moved.]
	On Question, Motion agreed to.

LORDS AMENDMENT

47 Page 39, line 12, leave out subsection (4)
	The Commons disagree to this Amendment but propose the following Amendment in lieu—
	47A Page 39, leave out lines 17 to 36 and insert—
	""(2A) Subsection (2B) applies if any proceedings are begun to challenge the validity of a grant of listed building consent or of a deemed grant of listed building consent.
	(2B) The period before the end of which the works to which the consent relates are required to be begun in pursuance of subsection (1) or (2) must be taken to be extended by one year.""

Lord Rooker: My Lords, I beg to move that the House do not insist on its Amendment No. 47 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 47A in lieu thereof. I have spoken to the amendment.
	Moved, That the House do not insist on its Amendment No. 47 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 47A in lieu thereof.—(Lord Rooker.)

[Amendment No. 47B not moved.]
	On Question, Motion agreed to.

LORDS AMENDMENT

130 Page 126, line 14, at end insert— "Sections 82 to 87 (simplified planning zones) are omitted and Schedule 7 (simplified planning zones) is omitted."
	The Commons disagree to this Amendment for the following Reason—
	130A Because it is not appropriate to abolish simplified planning zones.

LORDS AMENDMENT

139 Page 144, leave out line 24 The Commons disagree to this Amendment for the following Reason—
	139A Because it is not appropriate to retain the existing arrangements for the creation of simplified planning zones.

Lord Rooker: My Lords, I beg to move that the House do not insist on its Amendments Nos. 130 and 139 to which the Commons have disagreed for their reasons numbered 130A and 139A. I spoke to the amendments earlier.
	Moved, That the House do not insist on its Amendments Nos. 130 and 139 to which the Commons have disagreed for their reasons numbered 130A and 139A.—(Lord Rooker.)

[Amendments Nos. 130B and 139B not moved.]
	On Question, Motion agreed to.
	Bill returned to the Commons with an amendment and reasons.

Child Trust Funds Bill

Report received.
	Clause 2 [Eligible children]:

Baroness Noakes: moved Amendment No. 1:
	Page 1, line 13, leave out "2002" and insert "1988"

Baroness Noakes: My Lords, in moving Amendment No. 1, I shall also speak to the other amendments standing in my name and that of my noble friend Lady Wilcox in this group.
	The effect of the amendments is to create the ability for parents to open child trust fund accounts for children who were born on or before the magic qualifying date of 31 August 2002. Those pre-2002 child trust funds would enjoy all of the benefits of a child trust fund regime, except for the Government contributions at the outset and any top-ups. At the heart of the amendments is a desire to encourage a habit of savings. The child trust fund project has that as one of its aims and it is why these Benches have determined that they will not oppose the Bill. My party has a long-standing commitment to encouraging savings and that means ensuring that there are effective vehicles available at all of life's stages.
	The Government's record on savings is not good. I do not doubt the worthwhile intentions of the Government in the Bill, but we also need to judge them on their record. The fact is that the savings ratio has halved since 1997. It was 10 per cent then and now is 5 per cent with no significant recovery in sight. One third of households have no savings at all. It is hard to think of any of the Government's policies—as opposed to their rhetoric—which are strongly pro savings.
	We think that a savings ratio of 5 per cent is unacceptable. We are sceptical about whether a child trust fund policy will have any effect on the ratio in the sense that it will encourage further savings. I do not know whether the Government's own contributions of around £250 million a year to the trust funds will count as savings for the ratio—and the Minister might enlighten us—but even if it does, we know that this will not represent anything that resembles a culture or habit of saving that we need so much if the savings ratio is to be restored.
	I am proposing the amendments against that background. The Government scheme is for child trust funds to be available only to children born after 31 August 2002. We want children born before that time to be able to have child trust funds which are as similar as possible to those which benefit from the Government contributions. Part of that similarity will be the fiscal advantages that attach to child trust funds, but I do not want anyone to be carried away with the idea that I am proposing another major tax break for the wealthy. The Minister may wish to comment but I do not believe that the ability to invest £1,200 a year for a child will create a significant fiscal cost.
	For me, the advantages of extending the child trust fund are twofold. First, there is no easy way at present to create an account that mimics the child trust fund itself. In particular, the lock-in of investments until the age of 18 is not available in the same way. I believe that this will be an important feature for some categories of potential contributors—for example, grandparents—who may wish to be reassured that the money will be locked up. Another feature is the availability of a stakeholder product, which may be attractive to some.
	Secondly, and more importantly, there is the impact on the savings habits of potential contributors to the child trust funds. Parents like to treat their children equally and so, usually, do grandparents, godparents and so on. Creating an artificial divide in 2002 may mean that no additional savings will be channelled into child trust funds, because it will be impossible to treat equally children born before and after August 2002. If children cannot be accorded equal treatment, or only at disproportionate effort, the additional savings may simply not be made. The Children's Mutual, which has provided a helpful briefing to noble Lords, has been concerned about the matter—and so are we.
	The Minister will tell us that there is a power in Clause 2(7) to extend backwards the date of eligibility for child trust funds. We acknowledge that the Government have said that they will monitor the market to see whether there is a gap. But in Grand Committee the Minister seemed more concerned with whether or not the market provided tax-advantageous products and, as I have tried to point out, this is not the most important gap.
	In Grand Committee the noble Lord, Lord Newby, for the Liberal Democrats, said that he would support amendments that made it easier for families, especially poorer families, to invest. I hope that he now appreciates that our amendment is solidly in line with that principle: it is exactly about making savings for all the children of a family, rich or poor. I beg to move.

Lord Newby: My Lords, as noble Lords will know, we on these Benches oppose the principle behind the Bill, because we do not believe that it will achieve its objectives and that the money allocated to it by the Government could be better spent in the short term. As the noble Baroness, Lady Noakes, has pointed out, the line that we have taken has been to oppose amendments that increase the scope of the Bill, but equally to make sure that, to the extent that the Bill is likely to be implemented, all families should have an equal opportunity to invest in it. We shall be looking particularly at the situation facing poorer families and trying to ensure that they are eased in to the additional savings.
	This group of amendments has arguments in both directions. There is some evidence that it may, if passed, encourage some poorer families to invest in more than one child, although, as I have said on several occasions, I have severe doubts whether for many poorer families it either makes sense to invest in these products, rather than others, and whether they are likely to do so in any numbers.
	Against that is the question of whether the amendments increase the scope of the Bill. I believe that they do. The issue is not primarily one of cost, although I was intrigued to see under Amendment No. 13 that there is provision for a supplementary contribution to be made in respect of any child trust fund held by a child born on or before 31 August 2002. So there is a clear chink there, which could lead to payment by the Government into child trust funds for older children.
	A long way down the track there is also likely to be the potential for tax losses. Therefore, weighing up the two arguments against my own criterion, I find that the amendments extend the scope of the Bill and I shall not support them.

Lord Naseby: My Lords, I declare an interest as chairman of the Children's Mutual. I support the comments of my noble friend on the Front Bench. I wish to add a couple of points in relation to Amendment No. 1 and then turn to the two amendments standing in my name.
	First, it seems, on the one hand, that the Government are rightly and understandably saying that they recognise that one should not differentiate between one child in a family and another but they want time to reflect on that and to see how their proposals operate in the market. The problem with that is that the providers themselves are now planning the software and all the other necessary preparations, which are exceedingly complicated. Therefore, providers need to have a clear, authoritative statement from the Government on whether the scheme will be extended at some point. A specific date does not necessarily have to be given, but there certainly needs to be a statement from the Government that the scheme will be extended back to the remaining children within a family.
	My second point is that the Government are saying, as I understand it, that, for the moment, there are alternative methods of saving for children. The friendly society of which I have the privilege of being chairman has been selling to the children's market for 40 years. We know that market well and we know that about 20 per cent of families save specifically for their children. It reaches nowhere near the concept of the child trust fund, which is why that concept is so exciting in the first place. It is why, from the beginning, the average family will look to the child trust fund as the mechanism to save for all of its children. The kind of question we are getting from people seeking information is: "Can I split my endowment in two so that my elder son can benefit from the CTF and have top-ups too?". I understand why there should not be top-ups, but it is difficult to explain why they should not benefit from CTF. I hope that the Government will think again about finding a means of involving children who just miss out.
	The purpose of my Amendment No. 18 is to equal tax advantages, but not the other CTF provisions, to children born before 1 September 2002 and therefore not eligible for the CTF, and to do that through other regulated savings schemes. I see the provision as second best, but it is worth proposing and it would provide the means for raising any tax exemptions on subscriptions into those schemes to the same level as set for the CTF of £1,200 per annum. It would treat all children fairly, especially families of mixed ages; it would further encourage the savings habit; and it would provide a positive commitment to enhancing financial awareness.
	In case the Government say that that is all very well, but it is too expensive to do it, I have tabled an amendment with regard to friendly societies. I re-emphasise my involvement in that movement. Half of children's savings are provided by friendly societies. It requires only a change of figure in the regulations from £270 to £1,200 to make it possible, through the tax-exempt policy for friendly societies, at least to provide a vehicle. It could be a time-barred vehicle. There is nothing to prevent the Government from saying that for an interim period of five years they will increase the figure to £1,200 and will then review it. That will at least put child A on an almost level playing field with child B.

Lord MacGregor of Pulham Market: My Lords, I support this series of amendments. We had a long debate in Committee so I can be brief. First, I congratulate my noble friends on the Front Bench on the ingenious way in which they introduced the amendments and managed to make them stick.
	There are three reasons why I support the amendments. The first is the effect on families. There will be confusion among many parents when they discover that a child born in 2001 is not eligible for the tax benefits, but that a child born after September 2002 is. They will certainly regard that as unfair, and it may well discourage some families, grandparents, family friends or whomever from putting money into the trust fund because it will discriminate between children in the same family. Indeed, I am aware of no other children's savings product that discriminates between children in the same family, which is what this does.
	The second reason is the effect on the children. The purpose of the child trust fund is to encourage through grant and tax relief a savings habit among young children. In addition, as the Minister repeatedly said in justifying the scheme, the literature to be circulated with the trust fund will provide a financial education for them. Unfortunately, those two advantages will not be available to the older children in the family.
	We are talking about children who are now about two and a half years old. It is unlikely that they will be able to read the literature or be aware of the tax advantages until they are much older. Therefore, they are deprived of those advantages from the outset, which is unfortunate. Indeed, no other savings scheme for children has this level of tax advantage. My noble friend Lord Naseby indicated how it might be done, but the suggestion of my noble friend Lady Noakes is simpler taken with the educational aspect. If those are advantages for children born since September 2002, they should be an advantage for all children.
	The third reason relates to the point of view of the provider. We are all aware that the Children's Mutual, which has done so much work in this area, will be taking up child trust funds in a big way. However, the project is marginal for many other providers. It is a question of volume—and it really is marginal. If parents are discouraged from topping up for those children who are receiving a £250 grant and are unable to do anything for the rest of the family, that will have a disadvantage on the whole. However, if these amendments were accepted, undoubtedly the volume going into the child trust fund would be greater and might encourage more providers to participate.
	For those three reasons, I believe that these amendments are desirable.

Lord McIntosh of Haringey: My Lords, I shall not follow the noble Baroness, Lady Noakes, in a discussion about savings ratios. All right, if she wants me to, I will to the extent of one sentence. She is right that savings ratios since 1998 have been of the order of 4 to 5 per cent. There have been periods when they were higher, but the average over the past 40 years has been 3.5 per cent. There is therefore nothing dramatic or relevant to the Bill about savings ratios.
	I agree with the noble Baroness that with this Bill we want to encourage saving. That is one of the objectives of the child trust fund. However, we believe that it can be and should be achieved without legislating for child trust fund accounts for older children.
	Perhaps I may begin this Report stage by saying that we had a good idea with child trust funds. We put it into our election manifesto; we defined it carefully; and we consulted on it carefully. After all, we won an election and introduced legislation. But the measure must be carefully defined, workable, understandable and acceptable to families and financial providers.
	Now, this and several other amendments seek to embroider and add to it. They would certainly add substantially to the cost, if Amendment No. 13 is to be taken as being consequential on this amendment. It would allow for contributions from the Government. Surely, once someone has had a good idea and it has been agreed that it is a good idea and that it should go ahead, we should stick to the simple, well defined, well thought-out scheme which we have before the House and not try to play with some of its provisions.
	The new clause proposed by Amendment No. 11 and the related amendments would introduce a second form of child trust fund account for children born between 1 September 1988 and 31 August 2002. It is not being proposed, except as a power under Amendment No. 13, that they should have the initial government contribution, and there is no requirement on the Government to pay supplementary or further contributions such as the age-related contributions, although they would be allowed to do so.
	We are not convinced that these accounts, without an additional endowment, would offer parents—particularly parents on low incomes—a powerful incentive to save. The feedback from our research shows that one of the key attractions of the child trust fund is that the government endowments are an effective way to encourage parents to save. The research carried out by IPPR indicates that,
	"£250 would start the ball rolling. People might get into the routine of saving".
	It also indicated that,
	"£250 is a fair start. It is positive. With interest and Christmas money going in, that would build up".
	The only real incentive to save without the government endowment would be the tax advantage nature of the account. The noble Baroness, Lady Noakes, carefully disclaimed saying that she was not proposing a tax break for the wealthy, but the impact of her amendments is more likely to appeal to those on a higher income. Only about 50 per cent of children have any savings in their own name, despite the current tax advantage savings vehicles that exist.
	It is our firm belief that the industry will step in if it senses a demand for other types of children's savings vehicles. I cannot imagine a parent going to open a child trust fund account, asking whether there is a similar account for older children and not being offered other options. I am sure that that applies to the Children's Mutual.
	However, what if the market fails to step in as I have suggested? The Financial Secretary to the Treasury made two commitments on Report in the Commons which should reassure this House. First, the Government will continue to monitor whether, after the launch of the child trust fund, parents feel their demands for accounts for older children have been met. Secondly, the Government are working on proposals to meet any gaps identified. My right honourable friend pointed out that any changes could be met by regulations. No amendments to the Bill, which might create additional complexity, are needed.
	I might perhaps reassure the House further by explaining how we intend to monitor the market. We have consulted financial providers throughout the development of the child trust fund. We intend to continue those consultations in the period before the launch and in the first years of the child trust fund being available. In conclusion, I can give the noble Lord, Lord Naseby, the clear statement that he sought for the benefit of providers. It is not our intention to extend the child trust fund before 1 September 2002.
	However, I would not like any noble Lord to think that we are simply going to ignore the needs of children born before 2002. We are developing the child trust fund website. That will have a section specifically for children who are not eligible for the child trust fund, giving them information about other savings opportunities. I hope that the amendment will not be pressed.
	I turn to the amendments of the noble Lord, Lord Naseby. Amendment No. 18 would grant tax relief for child trust fund accounts to accounts for older children. I assume that those would be child trust fund-type accounts with the same key features. If the settlements legislation were to be disapplied on children's savings other than child trust fund accounts, even with a £1,200 annual limit on contributions, no controls would be in place to ensure that each child had only one such account. That could lead to widespread abuse. Parents could open multiple accounts for their children, or grandparents for their grandchildren, in order to shelter savings and investment income from tax. Rigorous controls must be built into the child trust fund system to ensure that only one child trust fund account can be opened for each child.
	The settlements legislation has been disapplied for child trust fund accounts only because children have no access to the funds until they are 18, and then only the child or young adult is entitled to the funds. It would not be appropriate to give the same treatment to tax-exempt savings plans—the noble Lord, Lord Naseby, pointed out they can attract £270 a year—precisely because those plans do not necessarily belong to the child, nor are the funds locked in until the age of 18.
	The noble Lord's Amendment No. 20 would amend Clause 14, which relates to insurance companies and friendly societies. The clause provides for the child trust fund business of life insurance companies and friendly societies to be taxed in the same way as their ISA business. The amendment simply supplements Amendment No. 18, except that it would not extend the treatment of funds to life insurance companies, only to friendly societies.
	Given our decision not to create child trust fund-type accounts for older children without waiting to establish how the market meets any demand for them, it would not be appropriate to amend the Bill in the way proposed by Amendments Nos. 18 and 20.

Baroness Noakes: My Lords, I thank the Minister for that comprehensive response and I thank other noble Lords for their contributions, particularly those of my noble friends Lord Naseby and Lord MacGregor, who have so much practical experience to bring to debates of this kind.
	The Minister raised a number of points. He spoke about the effect of the Government contribution on saving. The IPPR report has a lot of "mights". One of the problems with our discussion of how the child trust fund would operate in practice and what its effect would be is that it is a series of "mights". We have a concern that the child trust fund project will not have a dramatic effect on savings. Savings are important. We would not have invented the child trust fund ourselves.
	Noble Lords should reflect that four out of five families do not save for their children. Is there anything in the Bill that would make those four out five families save for their children? The barrier is that parents will see a potential unfairness between different categories of child.
	The Minister said that I had included the tax advantages. Indeed, I did, but not, I re-emphasise, because that would be a tax break for the wealthy. The Children's Mutual told me that for a savings product to be successful, it often has to have the label "tax free" or "tax advantage", even though there is no effective advantage in investing in it, because that is the psychology of investment. That was one of the advantages.

Lord McIntosh of Haringey: My Lords, not with the approval of the Government or the FSA.

Baroness Noakes: My Lords, I did not say that it was with the approval of the Government or the FSA. That was relayed to me by somebody who is very experienced in the field of the psychology of investment.

Lord Naseby: My Lords, I assure my noble friend and the Minister on the Benches opposite that the rules are quite clear. Any literature must follow the rules laid down by the FSA. Nevertheless, where there is a tax advantage, it does act as a trigger in the mind of the saver. My noble friend is quite right in pointing that out.

Lord McIntosh of Haringey: My Lords, I am shocked.

Baroness Noakes: My Lords, I thank my noble friend for explaining that point more adequately than I had been able to do. The Minister has said that the scheme will be monitored and that work may be undertaken to meet gaps but that the scheme will start without child trust funds for children born before August 2002. In an ideal world, we would like to see parity at the outset. It would not be costly, as the Minister claimed, because the benefits in terms of savings would far outweigh the cost. We are, however, conscious that the Bill reserves a power to extend the child trust funds. We must assume that the Government will undertake their scrutiny comprehensively and rigorously. We certainly expect the savings industry to be loud and voluble if it believes that the way in which the child trust funds are being implemented is, as we postulated, to the disadvantage of their success. On that basis, I shall not press the amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 3 [Requirements to be satisfied]:

Lord Newby: moved Amendment No. 2:
	Page 2, line 33, at end insert—
	"( ) Regulations shall not require account providers to provide equity-based accounts, and shall make provision for cash deposit accounts, including provision for such accounts provided by building societies."

Lord Newby: The amendment would remove the obligation on child trust fund account providers to provide equity-based accounts. It is aimed in particular at those building societies that offer cash-based accounts, but that do not, as a matter of course, offer equity-based accounts.
	The reason for the amendment is that the Government require all those who offer child trust funds to offer stakeholder, equity-based child trust funds. More than a quarter of all building societies, particularly the smaller ones, do not have authorisation from the FSA to offer regulated investment products. Therefore, as matters stand, they are not in a position to offer equity-based child trust funds. In order to do so, they would need to apply to the FSA to extend the regulatory permissions under which they operate. That would impose additional costs and an ongoing compliance burden which, given the 1.5 per cent charge cap, would mean that, for those societies, it would not be worthwhile incurring the additional regulatory burden. My understanding is that of the 17 societies in this category, only one is intending to extend its permissions.
	It has been suggested that this problem will be dealt with in the future by depolarisation, but that simply is not the view of the societies themselves. They believe that they would have to pay significant additional costs if they were to adopt the equity-based products and they simply cannot see financial sense in doing so.
	Why does it matter if a small minority of financial services providers are not able to offer child trust funds? The reason is that these building societies are regionally based societies with a good reputation and, typically, a very substantial market share in their own area. They have a high proportion of lending to children and young people and a high proportion of accounts with people whose incomes are relatively modest. They are the obvious place where many well off families would go to open child trust funds. These families are not used to going to a plethora of financial services providers for a range of products. They often have a very limited range of accounts, very often just with their local building society, and very often they are cash-based.
	When we discussed this matter in Committee the Minister said:
	"I think it is more important for parents to have choice than for providers to be marginally inconvenienced".—[Official Report, 18/3/04; col. GC151.]
	The truth is that it is not a question of the providers being marginally inconvenienced; it is a question of these providers simply not making provision at all because they cannot afford to offer these products. It simply does not make any financial sense for them to do so. In those circumstances, I contend that many families will simply not invest in child trust funds. The only financial institution they trust themselves is their local building society.
	I believe that if these building societies do not offer child trust funds, many parents will not invest elsewhere, and therefore the Government's aim of extending savings, particularly down the income scale, will be to an extent frustrated. I therefore hope that the Government have had a chance to reconsider the issue since Committee stage and to be more flexible. I beg to move.

Lord Naseby: My Lords, I wish that I could support the noble Lord. It seems to me that this is a case of special pleading, as some small laggard building societies cannot get up to date and offer a product which is universally thought right. Another danger occurred to me as I reflected on the amendment over the weekend. How do we ensure that building societies offering the child trust fund offer the stakeholder child trust fund as opposed to an attractive child deposit account—which does not have a price cap, is home based and has a number of other features, including the fact that it is non-stakeholder? So if there is a problem even in building societies that offer child trust funds—at least it seems to me that there is a potential problem—there is an even bigger problem in those that are not offering stakeholder child trust funds. If the noble Lord forces the amendment to a Division, I shall be in the opposing camp.

Lord McIntosh of Haringey: My Lords, I shall have difficulty distinguishing Amendment No. 2 from Amendment No. 3. Although each has a slightly different approach, both are basically on the same subject. Amendment No. 2 deals with the requirement for all providers to offer a stakeholder account. The stakeholder account has been designed to provide good value to all consumers. It is to be equity-based, risk-controlled, charges are capped at 1.5 per cent of fund value, and a minimum contribution of £10 will apply. All of those issues were debated in Grand Committee, and I am glad that we have reduced them to perhaps the core ones.
	In order to maximise accessibility and ensure that all savers can benefit from the good value of the stakeholder account, the draft child trust fund regulations have required all child trust fund account providers to include a stakeholder account as part of their product ranges. The Government want all savers to be able to benefit from the generally higher returns to equities over the longer term. This requirement would also avoid the problem of providers automatically offering low-income families cash accounts—which is I think what the noble Lord, Lord Naseby, was more than hinting at; I think he was actually suggesting it. Of course, any description of the services provided by the Children's Mutual society is of benefit to the House.
	Risk controls required for stakeholder child trust fund accounts would reduce the risk of a loss in value. However, savers will be free to invest in cash deposits, including those offered by building societies, if they wish. I will not go into the argument any further about equities. There are things to be said about that which are perhaps better referred to in the debate on Amendment No. 3. However, I am aware of the concern of some building societies that the FSA permissions required to offer the stakeholder account will mean that they cannot offer the child trust fund. That is the point made by the noble Lord, Lord Newby. He raised the concern with my office in response to my offer of a meeting between Grand Committee and Report stage.
	The Government's view is that the requirement to "offer" a stakeholder account means that a stakeholder account is always made available when an investor contacts a child trust fund provider. That does not mean that all providers have to manufacture their own stakeholder account. A firm could make arrangements with another firm to offer its products as the stakeholder investment provided that all products are available in a one-stop shop for the customer. We are keen to see a wide range of providers, including the majority of building societies, and other mutuals, join the child trust fund market. The Government are continuing to work with the FSA and providers with a view to allowing providers that do not have the full range of FSA permissions to offer the child trust fund, and for that to be achieved in a way that protects the interests of investors by giving them access to a good value, equity-based account for the long term, without placing undue burdens on providers.
	I hope that that indicates the work that is going on and the new thought that has gone into this issue since the matter was first raised in Committee.

Lord Newby: My Lords, I am grateful to the Minister for that reply and indeed for that latter comment. The truth, however, is that we still disagree about the effect of current provision on the likelihood of many lower-income families adopting child trust funds. I hear what the noble Lord, Lord Naseby, says about the possibility that these building societies are not as far advanced as the Children's Mutual; perhaps they should be able to offer more products more easily. However, the truth is that they cannot, and it appears that they will not. As a result, we believe that many of those who I would have thought the Government would be keen to see take up child trust funds will not do so. Therefore, as grateful as I am for the Minister's comments, I fear that he has not gone far enough, and I would like to test the opinion of the House.

On Question, Whether the said amendment (No. 2) shall be agreed to?
	Their Lordships divided: Contents, 32; Not-Contents, 107.

Resolved in the negative, and amendment disagreed to accordingly.

Baroness Noakes: moved Amendment No. 3:
	Page 2, line 36, leave out subsection (3).

Baroness Noakes: My Lords, the Minister alluded a few moments ago to the fact that Amendment No. 3 covers some of the same territory as the previous amendment. Indeed, I was surprised that the two were not grouped. However, as the role of the Opposition is to ungroup and not group amendments, I left it as it was proposed.

Lord McIntosh of Haringey: My Lords, in Grand Committee we tried to group them and they were ungrouped. Therefore, we thought that we would not chance our luck again.

Baroness Noakes: My Lords, that just shows the Minister that it is always worth another try. The effect of Amendment No. 3 would be to remove the requirement for a provider to offer particular types of account. The practical effect would be to remove the requirement to offer stakeholder accounts. In that respect, it goes beyond the previous amendment, which merely took out the requirement for the equity component.
	We have no problem with a stakeholder product being approved by the Government and being available to consumers, and we would have absolutely no problem if the Government's explanatory material said that stakeholder products were good things in which to put one's child trust fund money. We believe that that is the right place for the Government to steer voucher recipients. Equally, we have no problem with the Inland Revenue using stakeholder accounts as a default where parents cannot be bothered to do anything or where, as mentioned by the noble Lord, Lord Newby, they understand only building societies and, if those do not offer accounts, they will do nothing.
	However, we believe that the market should be encouraged to offer diversity and choice and it is neither efficient nor necessary for all providers to have to offer one kind of product. We believe that the explanatory material should explain the different types of product and their different features so that people can choose between them but we do not think that every single provider should have to offer a particular type of product as that may not play to the strengths of certain providers.
	Therefore, on the one hand, we favour diversity of choice and freedom for providers to offer what they are good at, but, on a practical level, we worry about the impact of the requirement to provide a stakeholder account. If, for example, I decide to go into business as a child trust fund provider, which I have no present intention of doing, I must provide a stakeholder account alongside anything else that I want to market to attract child trust fund vouchers. The other products that I offer can have child structures, investment approaches and the approaches to minimum investments that I want. As I understand it, if I choose to become a child trust fund provider, I can offer those very diverse products but I must also offer a stakeholder account. I should be grateful if the Minister could confirm that.
	Therefore, when I come to market child trust fund products, what would be the practical impact of having to offer a stakeholder product? Could I simply state at the bottom of my marketing material, "If you want one of the Government's stakeholder varieties, please apply separately", thus building my marketing around the unconstrained products that I wanted to offer? Or will stakeholder products, in practice, be a dominant offer? If it is simply a technical requirement, there may be little objection to it because the market will promote what it wants. I could not find anything in the Bill or the draft regulations which seemed to address that point. So I am struggling to find out what is the practical impact of having the requirement for a stakeholder product.
	As I have said, we believe that providers should have the option of choosing whether they offer such stakeholder products. When they offer the products, they have to accept a strict charge cap and a number of other obligations that go with that. In return, they get the promotional benefit of being one of the Government's chosen investment vehicles and are promoted as such when vouchers are issued. But if a provider chooses to go another route, what is the problem with excluding from the marketplace a perfectly good provider of non-stakeholder products, provided that no one pretends that what it is marketing is a stakeholder product? I beg to move.

Lord McIntosh of Haringey: My Lords, I sympathise with the difficulty the noble Baroness has in understanding what Clause 3(3) says because in regulations it is all stated as "may". However, we have published the draft regulations and I can make it clear that the intention in the regulations is to specify that all providers must offer a stakeholder account as part of their product range as it has been specifically designed to provide good value to all consumers. That is the basis on which we debated the last amendment and it had better be the basis on which we debate this amendment also.
	The stakeholder account is to be equity based but its risk will be controlled through lifestyling, a progressive move to less risky assets commencing no later than at the age of 13, and a requirement to diversify investments in the account. Although equity investments can go down as well as up in value, the evidence is that they provide the best returns for long-term investment. Nevertheless, it is not compulsory for investors to take out a stakeholder account. They are free to choose whatever account best fits their needs and risk preferences. Moreover, parents are always able to transfer their child's CTF account from a stakeholder one to a cash based one. Transfer between those accounts will be free.
	Parents will have access to financial information and education to help them make suitable choices about which type of child trust fund account is right for them. I say this with the noble Lord, Lord Newby, in mind as the only virtue that he sees in the Bill is the increased availability of financial information. An information pack will also be issued to parents alongside the CTF voucher covering points that need to be considered. I think everyone in the House agrees that it is important that families make informed decisions. To ensure appropriate support for parents, particularly those with little experience of savings and investment, the Government have commissioned research on the best way to communicate to parents how to take the financial and investment decisions involved.
	Allowing all investors to have the opportunity to invest in equity could help people engage with financial institutions and understand different ways of saving. That is why I am so puzzled at the expressed intention of the noble Baroness, Lady Noakes, in taking out Clause 3(3). This is precisely what that subsection and the regulations which it permits are intended to do. I wonder whether she is not in danger of finding herself on the opposite side from her colleagues in the Commons. After all, Mr George Osborne, the honourable Member for Tatton, said in Standing Committee in the other place:
	"when I first looked at the Bill, I had some sympathy with the point of view expressed by the hon. Member for Angus about forcing, requiring or encouraging people to use equity products . . . However, on further consideration, I have been more persuaded by the argument that if one purpose of child trust funds is to educate people about the financial services industry, savings and so on, we should try to encourage more people to become shareholders and shareowners, as they would through equity stakeholder products. Of course, as a Conservative I believe in a capital-owning, share-owning democracy and perhaps it takes a new Labour Government to turn us into that".—[Official Report, Commons Standing Committee A, 6/1/04; col. 62.]
	I could not have put it better. I hope that the noble Baroness, Lady Noakes, will not pursue her amendment.

Baroness Noakes: My Lords, I was extremely interested to hear the views of my honourable friend in another place. If one takes out the slip of the tongue—I believe that it was a slip of the tongue—which resulted in "stakeholder", I could not possibly disagree with my honourable friend. From what he said, I do not think that he therefore supported the compulsion for every provider to offer a stakeholder product. He was merely saying that equity investments are a good thing and that is certainly a proposition that I find little difficulty in signing up to.
	The Minister explained that the draft regulations have been published. However, I am still puzzled as to their effect, which is merely to state that there are stakeholder accounts and non-stakeholder accounts. My question to the Minister was what is the genuine effect of requiring a provider to offer stakeholder accounts if he can keep them as a marginal product in the suite of products which is there just to receive a tick from the Inland Revenue that a stakeholder product is available? So, my problem is first that I do not think that providers should be obliged to do this and secondly, I cannot see that requiring minimal compliance will achieve the Government's objectives. We will probably end up with providers, in effect, doing their own thing.
	If my interpretation of that is correct, I should have nothing to fear from the compulsion for stakeholder products because they will be marginal products promoted only if the providers choose to see that as a major plank of their marketing stance. If that is what the Government wish to achieve, I suppose I have to leave them to it. On that basis I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Noakes: moved Amendment No. 4:
	Page 2, line 41, at end insert—
	"( ) secure that when the child reaches the age of 18 it is used only for purposes specified in regulations,"

Baroness Noakes: My Lords, Amendment No. 4 amends subsection (4) of Clause 3 by adding a requirement that the terms of child trust funds should secure that when the child reaches the age of 18 the money is used only for the purposes specified in legislation.
	We had a useful discussion on the matter in Grand Committee in the context of a similar amendment. Since then, the Minister has written to me. I thank him for his comprehensive letter. It covered the impact of the human rights convention. As I understand it, it would not be possible to pass secondary legislation to deprive a person of his property in a child trust fund because the effect of Clause 3(4)(a) is that the child trust fund is the child's property and a restriction on that would deprive the child of his or her human rights.
	My amendment is inserted before Clause 3(4)(a). It is designed to ensure that the Government would have the power to create rules about how the funds should be used. I hope that it would be clear that the creation of a property right in paragraph (a) is subject to the rights that exist for the Government to determine how the money is used.
	I do not want today to rehearse the arguments for restrictions because I am not arguing for particular restrictions. I am arguing that the Government should not throw away the opportunity to ensure that child trust funds are spent on proper purposes. The Minister said that power could not be taken at a later stage without infringing the child's human rights. That makes it imperative for a power to be taken in the Bill.
	I remind the House that we are talking about significant sums of money in aggregate. With £250 million or so going into the scheme annually there will, once compound returns have been taken into account, be around £500 million in real terms maturing each year in 16 or so years' time. That assumes that the Government make no further top-ups and that no additional savings are made on behalf of the child. Taxpayers are funding this bounty and are entitled to know that the money will by and large be spent on purposes of which society approves.
	Many noble Lords have concerns that the maturing funds will be used for what were described in Grand Committee as "trust fund raves"; that is, they will pay for a party, alcohol, drugs or all three. The danger is greater when the trust fund has not been topped up by additional contributions from parents or others because the amount at maturity will not look particularly significant to the individual. On the Government's own figures, £250 invested in a child's trust fund at a nominal yield of 7 per cent will produce £456 in real terms after 18 years. That is party-sized money.
	The noble Lord, Lord Newby, in Grand Committee questioned the practicalities of policing a system that monitored how money should be spent. Clearly, there would be a trade-off between simplicity and practicality; too many potential uses and too much subjectivity would raise issues of practicality and cost. But we have seen from the US that practical schemes can be defined and operated. I am sure that we could devise a proper scheme if we were clear about what we wanted to do. Indeed, I think if we were trying to get additional contributions on behalf of children, for example, from grandparents and godparents, they might even be more likely to save if they saw some sensible regime for the ultimate use of the money.
	I hope that the Government will not turn their face against this. The child trust fund is based on little hard evidence. Evidence may well start to accumulate that the original faith in the power of financial education is misplaced. If the legal niceties are such that no later action can be taken, whatever evidence has emerged, the only action that will be available to a future government of whichever party would be to conclude that the risks of abuse of public money were too great to allow the experiment to continue. So, if the Government want the experiment to run its course, surely they want to ensure that they have the power to step in to provide for responsible uses of the money when it matures. I beg to move.

Lord MacGregor of Pulham Market: My Lords, again I do not want to go over all the arguments that we had in Grand Committee. However, I think that some of the reservations about dissipation of the funds on raves or a quick holiday and so on—and I seem to recall other noble Lords, including the current Deputy Speaker, raised these points in Grand Committee—continue. It is interesting that the similar United States's scheme has some conditions on the use to which the money can be put because the recipients are of course gaining not only from taxpayers' grants, as in this case, but also from tax relief.
	I do not want to go over those arguments, although I still think they are strong. I want to ask the Minister about one point referred to in his letter of 6 April 2004 to my noble friend Lady Noakes which he very kindly sent to all noble Lords. In it he stated:
	"Even if there were the necessary vires"—
	by which I assume he means granting the powers to impose conditions at the age of 18 on the use to which the money can be put—
	"I am also advised that if any such restriction were imposed, it would be regarded as a deprivation of the child's property, engaging its human rights under Article 1 of the First Protocol, and that there would be a serious risk of incompatibility with those rights".
	I regard that as a very important point because all the others are arguments in which one can take one side or the other. But if that were true, it is clearly a clincher against moving forward on this; indeed, it is a stopper to the whole argument. I notice that the words used were "serious risk". I do not know whether that is just a threat or if it is thought that the risk is very serious. That is why I ask the Minister to spell out exactly why it is incompatible with Article 1. We are asking that certain conditions should be applied to the scheme in return for taxpayers' grants and tax benefits.
	I make a similar analogy with another savings scheme: personal pensions. Personal pensions are the pensioner's property, just as here child trust funds would be the child's property. Personal pensions have certain tax advantages and in return for those tax advantages restrictions are imposed on them; namely, that by the age of 75 those pension funds have to be invested in an annuity. Does that mean, therefore, that that restriction in relation to personal pensions could equally well come up against Article 1? So, where I now stand is that instead of regarding this as a clincher against what we were trying to do with the child trust funds, which would have been a disadvantage, I suddenly see the attractions of the principle because I am all in favour of altering the conditions regarding pension funds being invested in an annuity by the age 75. I ask the Minister to spell this out because I think it is a very important point.

Lord Monson: My Lords, the noble Baroness, Lady Noakes, rightly pointed out that £456 in real terms is party-sized money. I should also like to suggest that it is dangerous old banger or dangerous old motorbike-sized money.

Lord Newby: My Lords, we make clear from these Benches that in principle we support the idea of the use of child trust funds being constrained so that they are put to purposes which we would all feel were positive. At the moment, that cannot be guaranteed by any means.
	I agree with the noble Baroness, Lady Noakes, that if the funds were so constrained, there would be a greater likelihood of parents and probably even more grandparents putting funding into child trust funds.
	The problem is that no one has come up with a workable alternative constraint scheme, leaving aside the human rights' point. From what little I know about the American system, it is a very different product from the proposal being made here. One could not insert that kind of constraint just through regulation; it would require root and branch recasting of the whole scheme.
	While I have a lot of sympathy with the purpose of the amendment, in the absence of any suggestion of how such a scheme might work, it is rather difficult to support it.

Lord McIntosh of Haringey: My Lords, the noble Lord, Lord Newby, has gone to the heart of the matter. I listened very carefully to the noble Baroness, Lady Noakes; she presented the amendment as if it were significantly different from the one moved in Grand Committee. It is a different approach, but it is intended to achieve the same objective of restricting how the money could be used when the child becomes a young adult at 18. That is the same purpose as sought in Grand Committee. I shall have to treat the amendment as if, for real purposes, it were the same as the one moved in Committee.
	The noble Lord, Lord Newby, is right: the core of the matter is our belief that 18 year-olds are best placed to decide the best use of the money for them. Of course there could be misuse; we cannot deny that, and I did not attempt to do so in Committee. The noble Lord implied that using the money to fund a gap year might not be appropriate. He said that his 18 year-old was raising money for a gap year. I would have thought that it was a very good use of a CTF account to allow a wider range of teenagers than those from the middle classes who do so now to benefit from the experience of travel. If it were my son or daughter, I would not be at all worried if a CTF were made available for that purpose.
	I said in Grand Committee that it was patronising to assume that 18 year-olds would not make the decisions that were best for them—research by the Children's Mutual indicates that that is the case. But is it not also patronising to assume that their parents or some committee would necessarily make better decisions?
	Improving financial awareness is one of the key objectives of the child trust fund. The financial education that will run alongside the child trust fund will help young adults to make the right decisions for their own circumstances. We believe that the amendment to allow 16 year-olds to manage their own child trust fund accounts will encourage a greater sense of responsibility about the money in that account.
	I remind the House that the Electoral Commission is considering those matters at the moment. It recommended that the voting age should remain 18 but that people could stand for Parliament at 18. No decision has been taken about that, but generally society is, rightly, giving greater responsibilities to younger people. To accept the amendment would be to go in the opposite direction.
	In response to the point made by the noble Lord, Lord MacGregor, I wrote to him and others to say that, even if we had the necessary powers in the Bill, our legal advice is that any such restriction would be regarded as a deprivation of the child's property, engaging its human rights under Article 1 of the First Protocol. There would also be a risk of incompatibility with those rights. That is more than what the noble Baroness, Lady Noakes, calls a "legal nicety". But the fundamental point is that made by the noble Lord, Lord Newby: the potential for incompatibility depends entirely on what the restriction is and how it is applied. I shall not rely for this purpose on the European Convention on Human Rights. On the merits of the case itself, it is right that we should treat young adults as young adults when they reach age 18.

Baroness Noakes: My Lords, I thank the Minister for that reply and all noble Lords for their contributions. The Minister said that he did not want to rely on the European Convention on Human Rights. However, in pushing to one side the European Convention on Human Rights, he did not answer the points made by my noble friend Lord MacGregor on what that meant in practice, particularly his very telling point on the read-over to annuities.
	The Minister said that my amendment was the same in effect as the one in Grand Committee. I am no lawyer. It was intended to be subtly different, but clearly failed that test. It was intended to make it clear that the Government did not create an unfettered property right but only a fettered one. I would have thought that if the Government wished to have the ability to control how funds could be used, they could create that. If my amendment fails technically, so be it. But we return to the Government's view that 18 year-olds are best placed to decide how to spend their money. We disagree on that. It is taxpayers' money that they will be spending, and the Government should be capable of producing a scheme for how that money should be spent—though not necessarily introducing it in practice.
	I should like to think further on the human rights issues. Perhaps we may take up the Minister's offer of a further discussion before the final stage. For today, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 4 [Inalienability]:

Lord McIntosh of Haringey: moved Amendment No. 5:
	Page 4, line 9, leave out from first "estate" to end of line 10.

Lord McIntosh of Haringey: My Lords, this amendment should be in the name of the noble Baroness, Lady Noakes, as she brought it forward. I would have liked to have had the opportunity to offer it to her to table in her name. It is a drafting amendment to deal with a matter raised by the Scottish Law Society. It removes an inappropriate reference to the Solicitors (Scotland) Act 1980. I am grateful to her for bringing it forward. I beg to move.

On Question, amendment agreed to.

Baroness Wilcox: moved Amendment No. 6:
	After Clause 4, insert the following new clause—
	"OFFENCES
	(1) It shall be an offence for any person to induce or attempt to induce a child to carry out an act within subsection (1) of section 4.
	(2) A person guilty of an offence under this section is liable on summary conviction to imprisonment for a term not exceeding 6 months or a fine not exceeding level 5 on the standard scale or both."

Baroness Wilcox: My Lords, this amendment stands in my name and that of the noble Baroness, Lady Noakes. We brought forward this new clause in Committee in an attempt to add some weight to Clause 4, on inalienability, by creating an offence. The issue is straightforward, and I hope that noble Lords will forgive me if I briefly run through the facts to make the case for our amendment clear.
	Clause 4 is intended to protect a young person with a child trust fund. It prevents the assets of a young person being transferred to a third party when the fund matures on the 18th birthday of the young person. That is designed to stop loan sharks or others using funds from a CTF account as security on a loan and subsequently appropriating the money when the fund is accessible at age 18.
	That is a laudable measure and it is a vital protection in the Bill. My worry, however, is that it lacks teeth. The noble Lord, Lord McIntosh, argued in Committee that the amendment was inappropriate. He claimed:
	"Clause 4(1) tackles the practical problem at its source by providing that any assignment of the investments in a CTF, for example, by way of security for borrowing, is void-that is, legally ineffective. There is therefore no incentive for any person to induce a child to assign or charge their CTF assets. Loan providers will not attempt to use CTFs as security for loans because they would not gain any advantage from so doing. They would achieve no legal rights to the assets within the child's trust fund".—[Official Report, 18/03/04; col. GC183.]
	I return to the point that I made in Committee. We are not talking about reputable loan providers, who will know the rules and abide by them. I envisage a dodgy loan shark, a manipulative "friend of the family" or other malicious adult who persuades a vulnerable and desperate young person, of say 16 or 17, to accept a loan on condition that they pay it back with interest from their CTF account when it matures. Such activity goes on as it is anyway. Young people are particularly liable to be targeted by disreputable adults. One only has to think about the number of young people who leave home due to family problems and are on the streets trying to make ends meet without sufficient funds. Now think of the circumstances when large sums of money will be available to every single young person on their 18th birthday.
	I do not want to paint a morbid picture of the state of our society, but it is likely that there will be more frequent instances of individuals trying to con young people out of the funds due to them at 18 from their CTF accounts by offering an advance repayable with interest. How is the young person in question to know about Clause 4(1)? The agreement with the loan shark or adult will not be legally binding. However, anyone who will undertake to defraud a 17 year-old out of their CTF will have no qualms about using any methods of intimidation to recoup their funds when the account matures.
	In Committee, I listened with interest to the noble Lord, Lord Newby, who said that creating an offence of the kind envisaged by our amendment was too draconian and would make criminal such activity as the loan of money from a parent for, say, driving lessons, which would then be repaid from the money from a CTF available at 18. This is activity that we would in no way wish to criminalise. We have looked again at our amendment and redrafted it to make it tighter and to try to address those circumstances.
	Subsection (1) of our amendment states that any person who induces, or attempts to induce, a young person to assign their funds over to a third person before maturity, and who demands a charge thereof, is guilty of a criminal offence. This would not criminalise a situation where a 17 year-old approached his parents and asked informally for them to pay for driving lessons with the understanding that he would be able to pay back the money the following year.
	What penalty would there be for an adult who ignored Clause 4(1) and successfully persuaded an unknowing young person to hand over their funds? There would be no penalty and no recourse to law, because no offence would have been committed. The young person, apparently, should have known that their CTF was inalienable under Clause 4(1), and should therefore have refused to repay whatever money was owed from their CTF.
	If the young person were to dare to challenge their loan shark under Clause 4(1), the loan shark might possibly accept that actually they had acted illegally, and the original amount of their loan would be lost to them. Is this a significant deterrent for loan sharks and devious adults? I would like to think that it is, but I fully believe that it is no deterrent whatever to a manipulative person attempting to exploit a child and appropriate a portion of their funds at 18.
	I stand firm in believing that, far from being draconian, this new clause on offences is vital in safeguarding the protection of children and young people and their right to the full value of their CTF at 18. I beg to move.

Lord McIntosh of Haringey: My Lords, let me start by acknowledging first that the noble Baroness, Lady Wilcox, obviously feels strongly about this issue, and I respect that. Secondly, I acknowledge that she has thought about the issue since Grand Committee. She has amended her proposition so that it would no longer be an offence, to use the example that we had in Committee, for a parent to pay for driving lessons at the age of 17 in the expectation of getting the money back when the child trust fund matures at the age of 18. That is helpful.
	We are left with the fundamental proposition that the noble Baroness is putting forward, which creates two new criminal offences. Under subsection (1) it would be an offence for anyone to induce a child—the noble Baroness said "or attempts to induce", but that is not what her amendment says—to assign, or agree to assign, the investments within their child trust fund or to charge or agree to charge those investments. Subsection (2) defines the punishments attaching to those offences.
	I hope that we made our position clear in Committee. Our view is that this new clause is legally inappropriate. The current drafting of the Bill ensures—in Clause 4(1)—that any assignment of or agreement to assign investments under a child trust fund and any charge on, or agreement to charge, any such investments is void, so that it has no legal effect. Clause 4 therefore removes any incentive for a loan provider to use a child's trust fund investment. There is no advantage for them to do so.
	If however, despite this—this is the loan shark example that I assume that the noble Baroness, Lady Wilcox, is talking about—the child trust funds are used to secure a loan, despite these provisions, the young adult at the age of 18 will be able to recover the funds, relying on Clause 4. The security will be made legally ineffective, and the child trust fund assets will be reinstated through the courts. There are additional safeguards against borrowing, for example, from loan sharks, in the fact that withdrawals from the account are not permitted while the child is under 18.
	The noble Baroness, Lady Wilcox, asked about penalties. Surely, the most important thing is that the courts are able to order that the money should be given back. That is really what we want to achieve, and I do not accept that making it an additional offence to attempt to induce funds is necessarily the right thing.
	However, I ought to respond to the noble Baroness, Lady Wilcox, to this extent. Between now and Third Reading, I will look into whether other aspects of the law—those aspects that might conceivably be brought into play if someone is doing something that turns out to be void—do bear on this, and whether there are any offences that might be relevant to meet the concerns of the noble Baroness. I frankly do not know the answer at the moment. I will find out, and I will write to her. The fundamental protection for the child trust fund is that any activity of this kind would be void, and the money would be recoverable through the courts.

Baroness Wilcox: My Lords, my heart was sinking when the Minister started speaking, because I thought that I was going to get absolutely nowhere here. His last two sentences have raised my spirits somewhat. It may be only a vain hope.
	I cannot emphasise enough, or too often, that I have worked in environments where I have seen this happen to people. I have seen youngsters really intimidated by members of their own family. I have seen them working towards a sum of money being taken away from them. It is my intention, and always has been, in those circumstances to be an employer who could try to help a child in my employ. We must always be looking to encourage employers to explain what the rights of young employees are. Perhaps that too will happen.
	If there is any activity that we can do that will make children run towards a policeman rather than away from a policeman, that must be a good thing. I am only too delighted to withdraw the amendment, in the hope that the letter that I will receive from the Minister will move us a little more towards some form of punishment.

Amendment, by leave, withdrawn.

Baroness Noakes: moved Amendment No. 7:
	After Clause 4, insert the following new clause—
	"INCOME-RELATED BENEFITS, ETC.
	(1) In determining the matter specified in subsection (2) no regard shall be had of income and gains arising on—
	(a) Inland Revenue contributions to a child trust fund;
	(b) subscriptions to a child trust fund;
	(c) investments under a child trust fund;
	(d) investments or other assets derived from a child trust fund.
	(2) Those matters are—
	(a) eligibility for,
	(b) entitlement to, and
	(c) levels of,
	the benefits and credits that are specified in regulations."

Baroness Noakes: My Lords, I rise to move Amendment No. 7, which inserts a new clause after Clause 4. This is an enabling provision, which does not commit the Government to do anything specific. It simply allows them to ensure that child trust funds are not taken into account for benefits and credits to be specified in regulations.
	In Grand Committee, I spoke to a more complex amendment that purported to specify particular benefits. Of course, for a scheme that is intended to run for 18 years or more, in that circumstance it would be silly to specify the benefits. Therefore, the formulation in this amendment allows the Government to specify the benefits or credit by regulations. I hope that this formulation—if I may term it thus—is Hollis proof; that is, that the noble Baroness, Lady Hollis of Heigham, would not object to it.
	The Government are trying to break the mould of attitudes to savings and to ownership of financial assets with their child trust fund project, in particular, with those groups who have not saved or have not traditionally had financial assets. However, the arm of government that deals with the social security system has a different approach. That part of government sees financial assets as a reason not to pay benefits. If the assets are kept, they can result in a denial of benefits. If they are spent, the capital deprivation rules can have the same effect. So the poor on income-related benefits find themselves in a no-win situation.
	Since Grand Committee, the Minister has confirmed in correspondence that a child trust fund would not be counted as the capital of parents while the child is under 18 years old. It would come into play only once the child has access to the fund at the age of 18. That still leaves the issue of the income-related benefits entitlement of an 18 year-old or—a point made by the noble Baroness, Lady Hayman, in Grand Committee—of a parent whose child has died who has inherited the child trust fund. It certainly leaves the general issue of capital deprivation by recipients of child trust funds.
	Amendment No. 19 standing in the name of the noble Baroness, Lady Hayman, deals with the issue of capital deprivation more comprehensively than my amendment. In addition to that amendment, there is the issue of capital deprivation by donors to child trust funds. The Minister's letters to me did not allay my doubts that there would be a postcode lottery in that area.
	The Government's response has been that they will disregard the first £6,000 of capital and that a further review of the threshold is "a real possibility". That is nothing like enough to ensure that child trust funds will be left out of account in calculating income-related benefits. The Government's social security approach is at odds with their desire to create a new savings paradigm. Why should a poor family think about saving if it might be neutralised by the benefit and tax credit system? I beg to move.

Baroness Hayman: My Lords, in speaking to Amendment No. 7 moved by the noble Baroness, Lady Noakes, I shall speak also to my Amendment No. 19. As the noble Baroness said, it deals more comprehensively with capital deprivation rules, but, I fear, perhaps less correctly in terms of drafting. I suspect that it is not Hollis proof. As the noble Baroness, Lady Noakes, said, this is an issue of principle; that is, whether we take a social security centred view of those who would be in receipt of child trust funds when they come to fruition or whether we look at the child trust funds and try to abide by what has been argued is their motivation to give all 18 year-olds, at a key point in their financial lives, an asset.
	It seems that we have been universal in ensuring that the tax benefits within the scheme are available to everyone, including higher rate taxpayers as well as standard rate taxpayers. But when we come to the fruits of a child trust fund, we run into the issue of the interplay between the social security system and the child trust fund. There is the possibility that the poorest 18 year-olds with trust funds would find that, in some ways, the trust funds are a financial liability rather than an asset. If they are on an income-related benefit, they run the risk of losing some or all of that benefit because they have capital above the £6,000 that the Government suggest would be adequate. But, as the noble Baroness, Lady Noakes, pointed out, if in better times for those particular families serious deposits were made over 18 years, it is quite possible that there would be enough in the child trust funds to take the 18 year-olds well over the £6,000 limit, particularly if there are other assets. The benefit might therefore be reduced. My amendment deals particularly with capital deprivation.
	Equally, if an 18 year-old was to spend that money on something that was not a rave, drugs or drink, but possibly spend it on a car—which might be particularly important at that time for the person to be able to get a job and a start in life—or to pay for a course that was not funded in any other way, there is the risk that he would lose out because he has been seen deliberately to deprive himself of the capital.
	Exactly the same problems would arise where parents inherit a child trust fund when a child has died before the age of 18. In Grand Committee, I referred to the number of deaths of under-16 year-olds in this country as being around 5,000 deaths per year. I said that one could take 10 per cent perhaps of those families—a higher number than would normally be on benefit—as being affected by these rules. I was shocked when I posed a Written Question on this issue, answered on 19 April. The noble Baroness, Lady Hollis, as I suspected, could not answer exactly my question; namely,
	"What proportion of those under the age of 18 who die each year are members of families dependent on income-related social security benefits".
	The noble Baroness kindly took the social fund funeral payments as a basis and extrapolated the result. The end conclusion was:
	"Of those under the age of 16 who die each year the proportion who are members of families where a funeral payment is claimed and the claimant is eligible is therefore approximately 32 per cent".—[Official Report, 19/4/04; col. WA 13.]
	One third of children who die before the age of 16 come from families dependent on social security benefits. So this is not as small a problem as we had originally thought. It is an important matter of principle. I had a helpful meeting with the Financial Secretary to the Treasury, and I am grateful to her. She wrote to me subsequently seeking to reassure me about capital deprivation and the circumstances that worry me, such as those where parents want to move the money to give to other children in the family, so that the child trust fund is passed on. Parents may wish to set up a memorial in recognition of the life of the child who has died. I was reassured that in those circumstances, staff in the Department for Work and Pensions would have the flexibility to make decisions and that they would be sympathetic and do all they could not to enforce the rules too rigidly or harshly.
	I accept that, but I would be more comfortable to see it in black and white. Where there is an element of discretion, there is always the possibility that rules and guidance will be interpreted differently. I hope, therefore, that my noble friend will look again at the issue. It is a question of whether the families of the poorest children in our country will benefit to the full from the scheme.
	I should like to record that the reason I came to this issue is neither because I am normally that assiduous on these matters, nor because a pressure group raised the issue. A great friend of mine, at the age of 90, remains as deeply concerned about child poverty and family welfare as she has been for seven decades. She has twice my 35 years' membership of the Labour Party. She chided me that the Government of which I am a supporter and was once a member are bringing in rules that run the risk of depriving the families of the most vulnerable children and young people in this country of the benefits of this scheme while safeguarding the tax advantages for others. Her name is Peggy Wynn. She has been for many decades a doughty and well-informed campaigner. I think that my noble friend knows her well, and I hope that he will be able to reassure us by accepting the amendments.

Lord Newby: My Lords, we accept the principle behind the amendments and, indeed, the amendments themselves. The friend mentioned by the noble Baroness, Lady Hayman, has summed up the argument exactly. Why should those reaching the age of 18 from well-to-do circumstances be able to enjoy the full benefit of the child trust fund while those who have fallen on hard times might not? That flies against the principles behind the whole child trust fund initiative. Therefore I hope that the Government have thought again about the matter.

Lord McIntosh of Haringey: My Lords, Amendment No. 7 would ensure that the child trust fund is not taken into account when entitlement to a range of benefits and tax credits is assessed. That is not spelt out in the amendment, but we have been over this ground sufficiently to know which benefits are means-tested and which are not. We need not go into the issue again. The House knows that the child trust fund does not affect entitlement to benefits such as incapacity benefit and disability living allowance, which are aimed at helping disabled people and those with long-term incapacity. They are not means-tested.
	I have confirmed that child trust fund assets and the income and gains from those assets do not impact on family benefits and tax credits before the account reaches maturity when the child is 18 years old. I stated that in the letter quoted by the noble Baroness, Lady Noakes. As only the child can access the money at the age of 18, in applying the regulations on income-related benefits, the Department for Work and Pensions will not treat the child trust fund as part of a parent's capital or a child's capital before the child turns 18.
	It is the Government's intention that when the child trust fund account matures, the funds could be rolled over into tax-effective savings schemes available at the time. Income from investment in such schemes does not affect entitlement to tax credits.
	The Government acknowledge that savings in child trust funds or any other savings vehicles could affect entitlement to income-related benefits once the child trust fund account holder turns 18. I do not see this as quite the point of principle referred to by my noble friend Lady Hayman, but it is certainly a potential clash of cultures between the benefits regime and what we are attempting to do here. We have responded to that.
	As a first step, the Financial Secretary announced at Second Reading in the Commons that from April 2006, the Government would increase the £3,000 threshold above which all savings reduced the amount of income support, jobseeker's allowance, housing and council tax benefits to £6,000. I should make the point that this concession goes very much wider than the child trust fund. It is a general concession confirmed in the Budget of 2004.
	In any case, very few people on benefits have capital of over £6,000. For example, only 1 per cent of claimants under 60 on income support and income-based jobseeker's allowance have capital of over £6,000 as at May 2002. The Institute of Fiscal Studies' analysis of the British household panel survey shows that the median net liquid financial wealth is zero for adults aged under 25. So it is reasonable to conclude that the number of 18 year-olds with capital of over £6,000 would be under 1 per cent.
	In addition, possession of capital above the lower threshold of £6,000 reduces the amount of benefit paid by one pound for every whole or part of £250 over £6,000. An individual would need to have capital over the upper threshold of £8,000 for income support and income-based jobseeker's allowance for them not to be entitled at all to the affected benefits. The upper threshold is even higher for housing benefit and council tax benefit, excepted at £16,000.
	The doubling of the lower threshold is a significant move to reward those who save. It will give parents, carers, grandparents and friends the reassurance they need at this stage that the child will not be unfairly penalised in future for the savings made now.
	In addition, the Government have made a public commitment to keeping under review the treatment of capital in income-related benefits. The first child trust fund accounts will not start to mature until 2020. The treatment of capital in income-related benefits needs to strike a sensible balance between targeted state support, incentives to work and not unfairly penalising those who have acted responsibly by saving. Given the doubling of the lower threshold and the commitment to keep under review the treatment of capital in income-related benefits, I have to resist Amendment No. 7.
	I turn now to Amendment No. 19, which would have the effect that when an individual spends his or her child trust fund at age 18, or if a person spends money inherited from a child trust fund, this would not be treated as deprivation of capital. The second situation refers to when a child dies. Under normal intestacy rules, the child's assets, including the child trust fund, will go to the parents, or spouse if the young adult was married, and then the normal rules for income-related benefits and tax credits will apply. This applies to any assets in the estate of a dead child.
	The Department for Work and Pensions has advised that expenditure would trigger the rules only when the significant purpose behind the spending is to secure entitlement to benefits. This also applies when grandparents make contributions to a child trust fund account. Their entitlement to pension credit is affected only if gifts into the child trust fund account are for the purpose of securing entitlement to pension credit.
	The decision on whether the capital deprivation rules are triggered for a particular case will be based on full knowledge of the individual circumstances. This is the way in which the Department for Work and Pensions operates, and has to operate. If an individual decides to spend his or her child trust fund account at age 18 and the significant motivation behind the spending was not to secure entitlement to benefits, this spending would not be treated as deprivation of capital. For example, if an individual was less well off and needed to buy a car in order to find work—a point made by my noble friend Lady Hayman—the motivation for spending his child trust fund would not be to secure entitlement to benefits; therefore the rules would not be triggered and the entitlement to benefits would be unaffected.
	That goes a good deal further than the description given by my noble friend Lady Hayman about local officers having to be generous and trying not to apply the rules. These rules are, in my view, properly tailored to individual cases rather than rules which ought to be on the face of the Bill, which it is sought to achieve.
	In the same way, in the event of a child dying and the sums being transferred to the parents, if the parents spend the child trust fund it would not affect their entitlement to benefits if the motivation behind spending the money was not to secure entitlement to benefits. That takes into account the example of the memorial raised by my noble friend Lady Hayman. The decision maker will take into account the parent's reason for the spending. For example, if a parent wished to transfer the deceased child's trust fund to the child's sibling and if the motivation was not to secure entitlement to benefits, the capital deprivation rules would not be triggered. The parents are likely to be distressed in such circumstances and every effort will be made to handle the situation sensitively and appropriately.
	I acknowledge what my noble friend Lady Hayman said about numbers. She estimated, and we agree, that there are likely to be approximately 5,000 deaths among children and young people under the age of 18. She estimated that about 10 per cent of them would come from families on benefits. The 32 per cent which she quotes from the Written Answer would seem to be in about the same range as the 40 per cent of children who will receive supplementary payment because they are in households in receipt of child tax credit because they have an income of less than £13,480. In situations where the child dies and moneys received from the child trust fund affect the parents' benefit, there will still be a tiny percentage of the population in receipt of the child trust fund, which we estimate to be about £10 million. Doubling the threshold will still work to reduce the number of parents who are affected in this way.
	I have said something about the comprehensive guidance which the Department for Work and Pensions issues to decision-makers—that is, its own staff—to ascertain when the capital deprivation rules would be triggered. The decision-makers' guide is not secret. The public can consult a copy of the guide at the social security office or view it online.
	Amendment No. 19 would allow individuals who deliberately spend their CTF to secure entitlement to benefits to be successful in their attempt. I say to my noble friend Lady Hayman that that would be unfair to taxpayers, inequitable and at odds with the Government's message that work is the best form of welfare. I say that in all friendship to Peggy Wynn, because, like my noble friend, I respect the lifetime's work that she has given to this and many other subjects.
	The Government aim to provide a balance between personal responsibility, work incentives and targeted state support. Income-related benefits are intended to provide help for those who are unable to provide themselves and their dependants with enough to live on and need outside financial support. It follows that if someone has resources, they should use them before calling on the state. Capital rules allow people to have a modest amount of savings without their benefits being affected, but they reinforce the message that work is the best form of welfare.
	I am sorry to have gone on so long on this subject but it is clearly treated as a matter of principle. I take it very seriously and I hope that the length of my response and the argument in it will encourage those who have put forward the amendments not to press them.

Baroness Noakes: My Lords, I can speak only for Amendment No. 7. The noble Baroness, Lady Hayman, will decide in due course what she wishes to do in respect of her amendment.
	I thank the Minister for his comprehensive reply. Those of us who have raised concerns about this do so because of the discretion that is used. One man's significant motivation is not the next man's in terms of approach.
	I welcome what the Minister said about making the decision-making guide available and the many examples he gave. That sounds reasonable in many respects.
	I confess that I am still troubled by this area. The message going out to the less well off is mixed. The child trust fund is trying to generate a new approach to saving. However, we still have the existing unamended version of the benefits and tax credits system which is means-tested and which will claw back a considerable amount of the effect of capital accumulation. We were trying to highlight those mixed messages because they dilute the message that saving is a good thing for people in low-income groups to do. If we are to restore the savings ratio on a permanent basis, we need to get that message across.
	I thank the Minister for what he has said. It will certainly repay close examination in Hansard. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 5 [Opening by responsible person or child]:
	[Amendment No. 8 not moved.]

Lord Naseby: moved Amendment No. 9:
	Page 4, line 15, at end insert "except where the application is made by telephone or the internet"

Lord Naseby: My Lords, I shall try to persuade the Minister to move forward on telephone and electronic applications. To do so, I decided to do a little more research on the matter, among government people. I discovered that over the past five years the number of people using online banking services has grown from 1 million to 5.4 million. The Government's e-envoy estimates that half of UK households have Internet access and 29 per cent of those are using online banking services. It is clear that more and more people expect to manage their financial transactions using the Internet.
	None of us objects to the idea of the voucher being sent by the Inland Revenue to the young couple who have a new baby and are eligible for the child trust fund; indeed, we encourage the idea. It is a marvellous means of communicating information, education and choice for the parent or guardian and acts as a reminder to them to set up a child trust fund for their child. They have the provision to open an account over the Internet or telephone. That is all very well, but then they have to send in the wretched voucher.
	The problem occurs when they do not send in the voucher. We have done some work in our society and, having considered other similar products, such as the baby bond—although it is not similar to the child trust fund except in the use of the Internet—we discovered that about half the people who apply have to be reminded to do something for the second stage. It may happen that a significant number of young couples want to apply, do apply, and open an account with everything in place except the voucher. Half of them may forget to send the voucher; some of them will lose it—which is inevitable. Life is like that. For some of them, the voucher will expire because they do not get around to doing anything about it until the last minute. Then there will be the extraordinary situation whereby the account is allocated to a provider, so that in the minds of applicants there will be two accounts—the one that they applied for initially when they forgot to send in the voucher and the second one, which is allocated.
	I hope that the Minister is beginning to get the picture. It seems to me that the process is really a recipe for confusion. We could deal with it if only the Minister and his team would look a little further and recognise that aspect. I believe that we killed off the mass fraud dimension in Committee, so I do not need to go into that. The point that the Minister made in that regard was that it was all to do with microlining on the voucher, but the microlining on the voucher has only four elements on it. It does not even have the child's name, the parents' names or the address on it; it does not say whether it is a stakeholder or non-stakeholder product, whether it is a voluntary contribution, who is paying, or the details of the bank account or the direct debit. A little more keying would not make a huge amount of difference.
	I say to the Minister in all sincerity that, given that 5.4 million families are using online banking—young, modern couples who will be the ones who use such a service—and all such services in future will probably do online banking, and if fraud is not an issue, we should get up to date. We should forget about insisting that the voucher must be sent in if the applicant applies over the telephone or via the Internet. I beg to move.

Baroness Noakes: My Lords, I tabled Amendment No. 10 in this group, which has a similar effect to Amendment No. 9 to which my noble friend Lord Naseby has just spoken. I might argue that my amendment is broader than his, which confines itself to the telephone and the Internet. I would gently suggest to him that his amendment to Clause 5(1) is a little difficult as the subsection relates to the Inland Revenue issuing vouchers, which must logically precede an application, so the Inland Revenue would not know what to do. But, leaving aside those issues, which are mere drafting, I think at heart we are in agreement that a child trust fund should be capable of being opened wholly by non-paper means and that the voucher should not need to be physically handed over to the provider.
	My noble friend talked about the experience of a 50 per cent failure rate which, of course, leads to extra costs for providers. In the context of a scheme that has a 1.5 per cent cap, that may well be a significant issue.
	In Grand Committee the Minister talked about the vouchers playing a part in financial education, but the education is likely to take place when the Inland Revenue gives the voucher to parents. It is really a case of the Government saying that they have an ignorant public and they have to play shops, as it were, by giving them something that looks as if it is valuable to enable the public to learn about financial education, and, indeed, that physically transporting the voucher will teach parents financial facts of life. That simply ignores the fact that very many parents already carry out transactions on the Internet and would find it extraordinary to have to complete the transaction physically.
	In Grand Committee the Government also discussed fraud and hacking into, and opening, multiple accounts. That is something that we found quite difficult to understand. I assume that the vouchers will have a unique number. It is not beyond the wit of the Inland Revenue's IT capabilities to have a system that ensures that a unique number is used once and once only. There may well be problems with the purported opening of two accounts. That issue could certainly lead to some additional costs but, if that is the case, I suspect that the majority of the costs would be borne by the providers. If they wish to take the risk of that additional cost of using non-physical transaction methods arising, it surely should be up to them.
	We have been disappointed thus far by the Government's non-adherence to the welcoming of the e-world which seems to permeate their other policies. I hope that repentance might be in sight.

Lord Newby: My Lords, we support these amendments although I agree with the noble Baroness, Lady Noakes, that her amendment is possibly technically the superior of the two.
	Looking forward, it seems to me that the extent to which we use paper for any purpose at all will be greatly constrained, and that paper will become a relatively rare thing. It certainly is as regards the method of communication of choice of my teenagers. I think that that is increasingly becoming the case with the Inland Revenue which sends me a piece of paper, the purpose of which is very much to tell me that it would rather I did not send it any more pieces of paper, and that it would like me to submit my tax return electronically.
	I suspect that in five or 10 years' time any vouchers being issued by the Government will certainly not be on paper. They will be sent electronically. I do not know whether the current definition of "voucher" within the Bill enables it to be sent electronically but it seems to me that to have the kind of belt-and-braces approach which is being proposed by the Government where a piece of paper must supplement an electronic communication, goes against everything else that the Government are trying to do. Therefore, I, too, hope that the Government might change their mind on this point.

Lord McIntosh of Haringey: My Lords, I am a sucker for being told that I need to get up to date and get in touch with the electronic era. I am always tempted by arguments of that kind.
	I am sorry that I shall not be able to respond in quite the way that some noble Lords would wish, particularly as I am in dispute with an insurance company, some loan notes of which I have lost. Every time I say that I have lost them and ask the insurance company to issue me with a duplicate or repay them, it sends me another stamped addressed envelope in which to send the voucher back. If I may, I shall take the relevant bits of Hansard and say that it is the view of all parties—all opposition parties at any rate in your Lordships' House—that I should be let off the hook and not have to recreate the voucher.
	The situation is a little different in relation to the amendments. Amendment No. 10, in particular, would remove the need for the paper voucher to be produced before an account could be opened. I do not think it true that we have solved the problem of fraud, as the noble Lord, Lord Naseby, seems to think, but I shall not go over the argument again.
	Is it really such an effort for the parents to get the voucher to the provider? We are talking about a voucher that is, in effect, a post-dated cheque for £250 or £500. Of course, it is post-dated almost 18 years, but nevertheless it is something that will be opened carefully with a paper knife rather than with the envelope torn in half. It will be treated reasonably respectfully. Some parents will choose to open an account with their usual high-street provider and, naturally, will take the voucher with them when they go. Others will be used to making applications over the Internet, but they will also be used to having to provide supporting paperwork, particularly proof of identity, by post.
	I long to see the day when the Internet and electronic communications reduce the amount of paper. I seem to remember that, when the new British Library was first proposed, the Conservative Minister, now a Member of this House, said, "Why do we have to spend all this money on the British Library? By the time that it's completed, books will be out of date and we will have the paperless society". It was the noble Lord, Lord Carlisle of Bucklow, I believe. It was not true, and it will never be true. My experience is that the Internet does not reduce the amount of paper, but increases the amount of copying.
	I was interested in what the noble Lord, Lord Naseby, said about the 50 per cent of people who approach the Children's Mutual to open an account but do not pursue it when asked to complete and return the necessary paperwork. If the Children's Mutual requires paperwork to be completed, why should the Government be so different?

Lord Naseby: My Lords—

Lord McIntosh of Haringey: My Lords, the noble Lord will have an opportunity to reply; it is his amendment.
	I pointed out in Committee that the main reason for requiring the voucher to be handed over was the efficient transfer of the data encoded in the microline on the voucher to the Inland Revenue. The noble Lord's response to that is that the information is incomplete. Of course, the implication is that we should include more information on the microline, rather than eliminate it altogether and increase the risk of keying-in mistakes. It costs money for both the Revenue and providers to correct data-matching failures. Of incorrect combinations of ISAs, 30 per cent are due to that kind of failure. It costs less to prevent that happening in the first place, and vouchers do that in a way in which Internet or phone applications cannot. Providers will not have the burden of checking the details with which they have been provided; they simply relay the data on the voucher.
	As I say, I am a sucker for being told that I ought to get up to date and be all electronic and e-government. However in this case, whatever is done, the voucher is the most efficient way of dealing with the issues.

Lord Naseby: My Lords, it is very difficult to respond to a Minister who, for one reason or another, does not want to do online banking. He has probably never done it; I may be wrong, but I do not think he has or that he really wants to. That is the problem, as young people want to do online banking. I suspect that the Minister has grandchildren. If he does, he will know that households with small kids crying are pretty bedlam-like. The papers get removed here, there and everywhere, and although the beautiful voucher—a cheque in lieu—arrives, it gets lost. There is no hiding the fact that it gets lost.
	However, returning to my key point—the 50 per cent example that I gave—the law requires at the moment that if someone makes a purchase in response to the Children's Mutual web site, that person can make an application but we have to send back to them a form to sign. The problem is that half of the people who are sent the form forget to fill it in. Most people then do so, after we send them a reminder. But, of course, that is a double transaction. That is what will happen with the vouchers. There will be a significant number of young couples who, for one reason or another, do not return the wretched voucher. We and every other provider will have to contact and remind them—and some people will then send in the voucher. All of that adds to the cost and aggravation for a young couple who have so many other pressures at home.
	I must tell the Minister that Internet banking is exploding. It will not stop at its current level. It will grow and grow. Even the Minister will have to take part before too long. Therefore, I ask him to take back the matter again. I shall not press the amendment tonight, but it is a key issue. I have given evidence on microlining, and I shall send the Minister a further detailed note. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 10 not moved.]
	[Amendment No. 11 not moved.]
	Clause 8 [Initial contribution by Inland Revenue]:
	[Amendment No. 12 not moved.]
	Clause 9 [Supplementary contribution by Inland Revenue]:
	[Amendment No. 13 not moved.]
	Clause 10 [Further contributions by Inland Revenue]:
	[Amendment No. 14 not moved.]

Lord McIntosh of Haringey: moved Amendment No. 15:
	Page 7, line 16, at end insert—
	"(4) For the purposes of this section, a child is to be treated as being an eligible child if entitlement to child benefit in respect of the child is excluded by—
	(a) paragraph 1(a) of Schedule 9 to the Social Security Contributions and Benefits Act 1992 (c. 4) (children in custody), or
	(b) paragraph 1(1)(a) to (d) of Schedule 9 to the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7) (corresponding provision for Northern Ireland)."

Lord McIntosh of Haringey: My Lords, under Clause 10 the Government have powers to pay additional government endowments when children reach a specific age. A payment at age 7 has been announced, but the Bill allows future governments to make further payments at other ages if they decide to do so. As drafted, the Bill prevents such payments being made to the child trust fund accounts of children held in legal custody, as child benefit is not paid in respect of those children and the award of child benefit is the key eligibility requirement for child trust fund payments. That means that if a future government were to decide on payments to children at any age after 12, any child held in custody on the relevant birthday would not receive them.
	Some people take the view that children in custody should not receive the payments, because that would be rewarding bad behaviour. But the Government do not believe that it is justifiable to disadvantage such children on the grounds that they were in custody on a particular birthday. To do so could lead to anomalous situations—for example, if a child were in custody for a long period but not on the relevant birthday and received a child trust fund payment, but a child in custody for a shorter period, including the relevant birthday, was excluded. The child trust fund is a long-term savings policy, and this group of children is likely to include some of the most disadvantaged and in need of help.
	The amendment would allow such age-related payments to be made by the exclusion from child benefit for the purposes of Clause 10. I beg to move.

On Question, amendment agreed to.
	Clause 12 [Subscription limits]:

Baroness Noakes: moved Amendment No. 16:
	Page 7, line 30, after "in" insert "respect of"

Baroness Noakes: My Lords, in moving this amendment I shall also speak to Amendment No. 17—both are about the culture of savings theme, which we covered in earlier amendments.
	Both amendments concern the annual limit on subscriptions to child trust funds that will be permitted. The amount is not specified in the Bill, but the regulations have now fixed that, initially, at £1,200 a year. Amendment No. 16 would replace the annual limit operating in each year with one that operated in respect of each year; and the intent is to create the possibility of carrying forward contributions from one year to the next.
	In an ideal world people would commit to regular savings. We fully subscribe to that idea, and I am sure that the savings industry will want to promote it. However, not everyone who might wish to contribute to a child trust fund is able to take on a regular saving commitment. Some people have irregular income patterns while others, perhaps relatives, have no intention to contribute to a child trust fund on a regular basis. They might, however, think that some of the "rites of passage" events such as going to a new school or a confirmation would be an appropriate time to give money. The effect may be that in one year the limit will not be used, but in the following year when such a rite of passage takes place there may be an accumulation of money available for investment. Our amendment is therefore designed to accommodate the fact that in practice regular savings are not the only form in which money will potentially come into child trust funds.
	In Grand Committee, the Minister said that providers would not be able to cope with that provision. I am confident that they could easily cope with it and would find a marketing advantage in telling people how much unused allowance they had so as to promote additional savings within the limit. It should not be necessary for every provider to offer a product if it cannot support it. But let those do so who can support variable amounts being contributed in a year, keeping track of the available limit, to see whether it is popular in marketing terms. Let the market decide on it. The concept of carry forward is not an alien one in tax law. Other allowances can be carried forward and they operate without problems.
	Amendment No. 17 is a kind of "Rooker-wise" amendment, so I hope that the Minister will recognise its impeccable credentials which go with indexation in the tax sphere. It proposes that the £1,200 should rise annually with the RPI. I do not need to remind noble Lords of the insidious effects of inflation, even at the relatively low level of 2.5 per cent in RPI terms which we are currently experiencing.
	In Grand Committee, the Minister said that the Government wanted to keep flexibility to manage the child trust fund in future years. "Flexibility", in government-speak, is code for chopping and changing at will. There is nothing in the amendment to stop the Government from increasing the limit beyond £1,200, but it prevents them from applying the kind of policies they have been applying to ISAs—that is, a combination of stop and go backwards.
	The amendment is designed to increase confidence in the stability of the child trust fund regime and thus increase its attractiveness as a home for savings. I hope that the Government will see that the amendments are designed to improve the attractiveness of the child trust fund regime overall and I look forward to the Minister welcoming them with open arms. I beg to move.

Lord McIntosh of Haringey: My Lords, this is another example of what I referred to in responding to Amendment No. 1. This is a good, simple idea. Although it is new and therefore cannot be proved in advance, it has been thoroughly examined and consulted on to make it as simple and practical as possible. What is being proposed in an accretion on to it. And too many accretions, like shellfish—I say that to appeal to the specialism of the noble Baroness, Lady Wilcox—could be damaging.
	The additional contributions that can be made into a child trust fund by family, friends or children themselves are an important part of the fund. And additional savings by family and friends could significantly increase the amounts which children receive at the age of 18. The child trust fund aims to encourage a partnership between government and families and to build on existing positive attitudes for saving for children.
	Amendment No. 16 would allow for unused subscriptions for one year to be carried forward to the next. I appreciate the point that not all parents can contribute the same amount every year and I understand that there are parents who would like to make up contributions that were missed. However, I persist with the view that it would be more complicated for providers to administer and for the child trust fund account holders and their families to get to grips with. After talking to some of the providers, our understanding is that a single, regular annual limit encourages regular savings and provides well for modest contributors who will form the vast majority of those involved with child trust funds.
	It would also be unwise to include in the Bill rules such as increasing the subscription limit in line with the RPI. I know that the noble Baroness, Lady Noakes, does not approve of it, but we have given flexibility to future governments to manage the trust fund in the light of future development needs and opportunities. It is not fair to say that that would necessarily mean a slow-down or a stop in further changes. Yes, Rooker-Wise is relevant. There would be pressure to increase the limits in line with the RPI. Our rejection of the amendment is not intended to be a restriction. We are simply saying that future governments should decide the limit. We will keep the subscription limit under review in the light of the progress of the child trust fund. I am not sympathetic to the amendments, as the noble Baroness, Lady Noakes, seemed to think.

Baroness Noakes: My Lords, I cannot express to the Minister how disappointed I am that he has chosen to turn his face against the amendments. He described them as barnacles on shellfish, which I find particularly wounding.
	The amendments were put forward as a serious attempt to improve the model, not simply as "harmful accretions", which was another of the terms used by the Minister to describe my amendments. We are concerned to ensure that the scheme, if it goes ahead, accommodates the different savings patterns that will exist. Whatever the savings industry wants, it will not be the case that every family can contribute a regular amount every month or year. Life simply is not like that. We were also trying to encourage the Government to commit to something that would represent stability in a savings product and avert possible cynicism. Many people have seen what the Government have done with ISAs; namely, the progressive reduction of the maximum annual contribution and the prospect of that amount falling to £1,000 next year. They have seen what the Government have done to savings products. Why should they believe that the Government would do anything different in future? The Bill gives them no reason to do so. However, the Government have unkindly rejected my amendments. I must accept their judgment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 17 not moved.]
	Clause 13 [Relief from income tax and capital gains tax]:
	[Amendments Nos. 18 and 19 not moved.]
	Clause 14 [Insurance companies and friendly societies]:
	[Amendment No. 20 not moved.]
	Clause 20 [Penalties]:

Lord McIntosh of Haringey: moved Amendment No. 21:
	Page 12, line 25, leave out from beginning to "5(5)" in line 29 and insert—
	"(a) the provision by the account provider, as a child trust fund, of an account which does not meet the condition in subsection (7A),
	(b) a failure by the account provider to comply with section 8(2) or 9(3) or with a requirement imposed on the account provider by regulations under section"

Lord McIntosh of Haringey: My Lords, in moving Amendment No. 21, I shall speak also to Amendments Nos. 22 and 23. These amendments to Clause 20, which imposes penalties, are essentially tidying-up amendments to ensure that the references to other clauses of the Bill are to clauses under which offences can be committed and so penalised. None of the changes affects the penalty regime in any way. I beg to move.

On Question, amendment agreed to.

Lord McIntosh of Haringey: moved Amendments Nos. 22 and 23:
	Page 12, line 31, at end insert—
	"(7A) An account meets the condition referred to in subsection (7)(a) if—
	(a) it is of one of the descriptions prescribed by regulations under section 3(2),
	(b) section 3(4) is complied with in relation to it, and
	(c) the requirements imposed by regulations under section 3(5) are satisfied in relation to it." Page 12, line 35, leave out from "each" to end of line 37 and insert "account affected by the matter, or any of the matters, in respect of which the penalty is imposed,"
	On Question, amendments agreed to.
	Clause 27 [Commencement]:

Baroness Noakes: moved Amendment No. 24:
	Page 16, line 8, at end insert—
	"( ) No order may be made under subsection (1) before the dissolution of the present Parliament."

Baroness Noakes: My Lords, I rise to move the last of the amendments on Report. I can hear the sighs of relief starting to echo around the Chamber. While the last, but certainly not the least, of our amendments, the amendment would delay the commencement of the Bill until after the next general election.
	My proposition is a simple one. The child trust fund policy owes as much to the electoral cycle as it does to high-minded notions of "asset-based welfare"—which was trotted out in another place. I am glad that the Minister has spared your Lordships that. The policy was announced before the previous general election, and it has been implemented with the next general election fully in mind. In Grand Committee I went through the logic, which would have been clear back in 2001 after the previous general election, that the most likely time for the next general election—I said "most likely"; it is not an absolute necessity—would be in spring or early summer 2005. To reach that conclusion one has only to put together the Prime Minister's general desire to get beyond four years, not wanting to be boxed in at the end, and the EU presidency.
	So when is the child trust fund being implemented? In spring 2005. That is when parents of about 1.8 million children will receive a voucher worth about £250 from the Inland Revenue, which is the department that the Chancellor runs. Unlike most letters from the Inland Revenue, which no one wants to read and usually ask for money, these letters will be very nice because they will contain a voucher that looks a bit like a cheque. So imagine the warm feelings of the 3 million or so parents—otherwise known as voters—when that happens. Taxpayers' money amounting to about £450 million will finance that. As we discussed in Grand Committee, the notion that the Chancellor will use his Budgets to secure voter approval is not very surprising. We all expect that next year's Budget will be very long on those matters. What is surprising is the calculated use of the child trust funds.
	Back in 1769, the legal scholar William Blackstone opposed universal suffrage because he thought that the poor would sell their votes to the rich, who would then use their new power to exploit the middle classes. If we let the Bill be used to encourage anyone who thinks that £250 is a lot of money to vote for the Chancellor's party, we will indeed be handing him power to exploit the middle classes. It is the middle classes who have already borne the brunt of the Chancellor's additional taxes—more than £5,000 per household since 1997—and they will be the ones who have to bear the tax rises of the Chancellor's third term if he gets the opportunity. That is why we think it would be right for the Government to wait until after the general election. That would not be much of a delay for a policy that has an 18-year span. I beg to move.

Lord McIntosh of Haringey: My Lords, I think that this is unwise. There is a certain inevitability in the way in which policy, particularly new policy proposals, achieve fruition. You have an idea. You put it in a manifesto. You win a general election. You work out what the idea means in practice, you consult on it. If people are not happy you consult again. You produce legislation and you bring it before Parliament. You subject it to the severe scrutiny of your Lordships' House. When that has happened you allow enough time for it to go through. That may take three, four or five years—I do not know. I do not know when the next general election is going to be.
	I would be astonished if we won the previous general election to any significant effect because we put child trust funds in our manifesto. I would be astonished if we were to win or lose the next election to any significant effect because we had pursued that policy through to fruition. On the other hand, if we were given the argument that the Opposition had denied parents this £250 or £500 because of these electoral reasons and we were able to go into the election saying, "You could have had this money but the Conservatives would not let you have it", I would think that that would have very considerably more electoral effect than what we are proposing to do now. I would strongly advise the noble Baroness, Lady Noakes, in her own interests not to pursue this amendment.

Baroness Noakes: My Lords, I thank the Minister for his advice. I completely accept that, in the electoral cycle, ideas work their way through and are then enacted. However, relatively few of them involve the transfer of significant amounts of money to individuals, admittedly in a form which could be put into an account but could not be accessed for some time.
	If the general election were held next June, the delay would be relatively small. It is merely a matter of there being no suggestion that the Government could influence the outcome by using a particular type of policy. It is not a question of whether or not the Minister would be astonished. Let it be beyond doubt that if this is the Government's policy, that is fine; it will be implemented if they win the election. However, if they do not win the election and perhaps the Liberal Democrats win it, it will be for the Liberal Democrats to decide whether or not they implement the policy. I think we know from the tenor of the comments of the noble Lord, Lord Newby, what his answer would be. That is why we consider this to be a very important issue.
	When we tabled the identical amendment in the Commons, I was encouraged that the Liberal Democrats all voted for it, including their leader, Mr Kennedy, and I think it is appropriate to test the opinion of the House.

On Question, Whether the said amendment (No. 24) shall be agreed to?
	Their Lordships divided: Contents, 17; Not-Contents, 67.

Resolved in the negative, and amendment disagreed to accordingly.

Asylum and Immigration (Treatment of Claimants, etc.) Bill

Baroness Scotland of Asthal: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
	Moved, That the House do now again resolve itself into Committee.—(Baroness Scotland of Asthal.)

On Question, Motion agreed to.
	House in Committee accordingly.
	[The DEPUTY CHAIRMAN OF COMMITTEES (Baroness Gould of Potternewton) in the Chair.]

The Earl of Sandwich: moved Amendment No. 24:
	After Clause 8, insert the following new clause—
	"REPEAL OF SECTION 55 OF THE NATIONALITY, IMMIGRATION AND ASYLUM ACT 2002
	Section 55 of the Nationality, Immigration and Asylum Act 2002 (c. 41) (late claim for asylum: refusal of support) shall cease to have effect."

The Earl of Sandwich: In moving Amendment No. 24, I shall speak also to Amendment No. 41, which would amend Schedule 4. Section 55 of the Nationality, Immigration and Asylum Act 2002 was in my view a mistaken and last-ditch attempt to reduce the number of asylum seekers in this country. It was introduced during the very final stages of the NIA Bill's passage through Parliament in the autumn of 2002, giving both Houses only very limited opportunity to consider its potentially devastating consequences.
	The amendment to repeal Section 55 was tabled in another place by Neil Gerrard. It was grouped, but because of the guillotine it was never debated, which is another example of this House picking up the pieces—in this case an argument which already had considerable support among MPs. Incidentally, the original government amendment to introduce Section 55 was given only 15 minutes in this House in October 2002 and no time at all in the Commons.
	Noble Lords may remember that Section 55 originally denied all National Asylum Support Service (NASS) support to adult asylum seekers who claimed in country and could not show that they claimed as soon as reasonably practicable after arrival.
	The Government have since all but admitted that this section is not working, conceding only last December that three days is a reasonable time in which to claim. In other words, the Government have accepted that this section, which so many of us opposed 18 months ago, was always based on the false premise that people—including many genuine claimants who may have suffered trauma, been trafficked or tricked into coming, been given false documents or destroyed documents under duress—should somehow be able to produce all the right papers at the port of arrival or soon afterwards.
	Noble Lords who support the amendment are pointing out that most people are in this position when they come here, and that the three-day concession has made very little difference. That is also confirmed by the high rate of success of in-country applications. Many applicants with well founded claims apply after 72 hours.
	As the noble Lord, Lord Avebury, said in a previous sitting, the High Court is now flooded with cases, with solicitors turning away more than they can take on. In-country applications, meanwhile, are still at a very high level. Four out of 5—81 per cent—of asylum seekers on whom the Home Secretary made a positive asylum decision in the first three quarters of last year, for example, had applied in country. That is three quarters of all applicants. Using 2001 figures, two out of three positive decisions were based on in-country applications. That situation will continue unless Section 55 is removed. The Home Affairs Select Committee this year described it as harsh and called for a review. There is an element of official desperation in that, while most people are refused support in their first week, case workers are even being instructed that someone claiming asylum four days after arrival is a suitable case for refusal. It is obviously absurd to say that asylum claims that have credibility on a given evening somehow lose credibility the following morning.
	I shall briefly cite two cases from the Merton Churches' support group. One young woman arrived on the Saturday of a bank holiday weekend. She went to the immigration office in Croydon on the Monday, and it was closed. She went back on the Tuesday and was judged to be a late claimant and refused under Section 55. An elderly Somali woman lost her first appeal on the ground that she did not know where she was or where she had come from. Her second appeal was won for the same reason, because she was obviously suffering from dementia. That surely demonstrates the absurdity of the three-day rule.
	Incidentally, it would be helpful to hear from the Minister whether the section was regarded as a deterrent. I understand that the fall in applications last year was not the result of Section 55, but of other factors, such as external border controls and reduced numbers coming from Iraq, which were down by 72 per cent last year. The proportion of asylum applications made in-country has actually increased. Of the total number of UK asylum applications, 65 per cent were made in-country in 2001, and that figure rose to 72 per cent in 2003.
	The humanitarian consequences of all that are most obvious to local authorities, non-governmental organisations and churches, all of whom have to take responsibility for any failures of legislation. The Mayor of London's office, which is very concerned about the matter, has published its own report, Destitution By Design, expressing concern about the number of adults made destitute by the section, which came close to 10,000 last year, or 200 people a week.
	Research for the Greater London Assembly showed that, despite the efforts of local communities, 29 per cent of people denied support under Section 55 in London last November had to sleep rough. That implied a rise of more than half on the previous recorded tally of people rough sleeping in London. As many as 50 per cent of those destitute under Section 55 are women, which is a much higher proportion than of asylum seekers as a whole. I declare an interest as a board member of Christian Aid. Thanks to the Churches' Commission for Racial Justice, I have read case studies from the Merton Churches' support group and the Eritrean group at the Crossroads Women's Centre. There are also examples from Oakington. Those show how many church and community groups, mainly in London but also elsewhere, are trying to cope with increased numbers. People who have undoubtedly escaped persecution and destitution in their own country are simply being turned out on to the streets. The Catholic bishops have called for repeal of the section. Their statement reads:
	"seeking asylum is a fundamental human right, guaranteed in international law. It is therefore incumbent on the Government to make certain that no-one is left destitute, homeless or detained arbitrarily at any point during the process of an asylum application".
	One worrying consequence of Section 55 has been the suspicion that some established voluntary agencies that are trying to administer NASS support under this section are seen by asylum support groups as agents of policy as well as service-providers. That could easily undermine the mutual trust that has always existed at local level. I know that the Government are under pressure to get results. We have all heard about the Daily Mail poll that shows how public confidence has fallen. But I hope and expect that I have said enough to convince noble Lords that Section 55 was a mistake and that, although we may well need to discuss the cut-off point following earlier amendments, the Government must now move to repeal it. At the very least, they should organise an independent review. I beg to move.

Earl Russell: My Lords, I thank the noble Earl, Lord Sandwich, for the clarity with which he has introduced the amendment. He has dealt with all the nuts and bolts with admirable precision. I want to try to look at it in a slightly wider context. It seems that there are four possible grounds on which the amendment could be held to be valid. I need to prove only one of them to satisfy the Committee; in fact, I think that there is force in all four of them.
	First, it could be argued that it is always wrong to reduce people to a level of destitution; that it is a basic principle that people have a right to life; and that the state is there to protect them and to help to ensure that right to life. The Minister will talk about rights and responsibilities, but when you link rights and responsibilities, the biggest responsibility of all is that of the Government to protect the lives of those temporarily or permanently under their protection. That is, in the 17th century phrase, the keystone which closes up the arch of government. Take that away and all the rest collapses.
	Prima facie, having no visible means of support is below subsistence level. But, as my late colleague Professor Jack Fisher used to say, if you are below subsistence level you are dead. That creates a rebuttable presumption that some of those who have been so disentitled but have stayed alive have done so by illicit means. The maxim,
	"lead us not into temptation",
	has more force than it is sometimes given. It is to lead people into temptation to give them no visible means of support whatever.
	Saint Thomas Aquinas maintained that it was not a sin for the destitute to steal from the rich to support themselves. I have never been certain that I have agreed all the way with Saint Thomas. I would prefer to say that it was a sin that I would always be inclined to look on with mercy. But it is certainly a temptation that is created. So it contributes more—and, God knows, we do not need this—to the fear and hatred of asylum seekers, which was demonstrated last week in Portishead, where there was an attempt to open an office for interviewing asylum applicants. All the residents of Portishead have created such an outcry against that—polluting the town with these evil people—that the only one who spoke up for them at a town meeting was in real danger. That is not clever.
	I once said that the case for not disentitling people to benefit was as strong in terms of fear created among the rich as of want created among the poor, because when the rich get fear they tend to get fierce. I had quite forgotten that I had said that. I was reminded of it by the noble Baroness, Lady Kennedy of The Shaws, whose newly published book, Just Law, is well worth studying.
	It may be argued that even if it is right to deprive people of benefit, it is wrong to do it to asylum seekers because they are too vulnerable. There is a sort of unofficial guidebook—a sort of Down and Out in Paris and London as it were—which English people on the streets pick up from each other very quickly indeed. Having had a pupil who was homeless on the streets for six years, I have heard a lot about this. He was a paranoid schizophrenic who decided not to take his medicine. English people on the streets know which restaurants put out food, at which times; they know the culture; they can talk to people and we do not allow the force of this. During the policy of dispersal, that ill-fated policy, there was once a Malay who was sent to Brighton where not a single person in the whole town spoke his language. Arguably, it is a more severe penalty when inflicted in these circumstances than when it is inflicted on people who are in surroundings that they know.
	There is also a remarkable failure of due process in the working of this clause. The noble Earl, Lord Sandwich, quoted cases of the next working day. In Mr Justice Maurice Kay's judgment, there is a case of someone who applied for asylum later the same day on which he landed, which was held to be an unreasonably delay. Attention has rightly been drawn to the fact that the proportion of in-country applicants has gone up. I have never been able to understand how the Home Office believes that it is possible to deter people from applying in a particular way by changing British benefit regulations. I simply do not see how such regulations are brought to the attention of the people who are supposed to be subject to them. This is not a rhetorical question: were these changes promulgated on the streets of Harare, or Freetown, or Kabul? Are the presses of those countries so free that you can report, in detail and accurately, under what terms you can get asylum in the United Kingdom? I would be surprised if that were the case, but I cannot see how these things can have a deterrent effect if they cannot be made known to those who are supposed to be deterred.
	It is about time that the Home Office gave an answer to that question. Certainly, the system is not working. It is having the reverse effect from the one intended. Also, it assumes that applicants in-country are likely to be less genuine than those who apply at the ports. That contradicts the Government's own figures, which show that two-thirds of successful applications are made in-country. As one of my pupils said to me when he found a contradiction in my index, "Where are you right?". The Government must be wrong in one or other of these things.
	It is likely contrary to the European Convention on Human Rights. I had a communication this morning from Fisher Meredith, the firm for which my daughter-in-law works—I declare an interest. I do not have the details, because I mistakenly thought that this was coming up tomorrow. It confirms what Mr Justice Maurice Kay has said, that the volume of cases under ECHR on this subject is in danger of clogging up the courts because they have nowhere else to go. He also confirmed my impression that the interpretation of the words, "inhuman or degrading treatment" in Article 3 of the Convention is at present hanging in the balance and that a judicial consensus has not yet emerged as to how those words are to be interpreted.
	We also agreed that the more cases of the sort precipitated by this clause that come to the courts, the more likely the judges are to reach the conclusion that disentitlement to benefit is always inhuman and degrading treatment. At present, the threshold is referred to as "destitution plus". No one understands exactly what is meant by the "plus", but it could be held that the particular circumstances of being an asylum seeker, on which I was speaking a moment ago, constitute that plus. That is a risk that the Government should not take lightly.
	Were the Government or the ECHR judges to decide, either in Strasbourg or in this country, that all disentitlement to benefit was in breach of Article 3, that would cause a confusion in Government social security policy which, if I were the Minister, I would not approach with equanimity. It would be a good example of the regular political rule that when one gets very frightened of something one produces rather than prevents the effect that one fears. The Government really ought to think again, or they will find that it is too late.

Lord Hylton: This discussion appears to raise important questions of procedure. First, why are we being asked to consider four amendments and one clause stand part debate in isolation from the rest of Committee stage of the Bill? Secondly, why have the Government brought this little piece of Committee stage before us at a very late hour, well after any conceivable dinner time, following two other complex and controversial Government Bills? It seems to be unusual, unprecedented and very undesirable.
	Turning now to the amendment, I am very happy to support my noble friend Lord Sandwich. I think that he moved the amendment in a most comprehensive, logical and moving way. I hope that the Government are therefore in listening mode tonight, particularly regarding an amendment designed to prevent destitution. The Government may fancy that they have saved themselves some trouble of an embarrassing kind by the way in which they have treated the House. But I think that it is not out of order to suggest that they will be storing up trouble for themselves during the later stages of the Bill. Have they perhaps considered the prospect of sitting on every Friday between now and July?
	Home Office statistics apparently admit that there are already 7,500 people destitute because of the legislation that we are considering. Reference has already been made to the burden that this causes for Church groups. I hope that the right reverend Prelate, who is in his place, will be able to add to that and to give more details. It is certainly causing problems, acute worries and anxieties for the members of refugee and exile communities already in this country who are bound to feel moved by compassion for their fellow countrymen who find themselves in such difficult circumstances. It is also causing major problems for a whole range of charities that are confronted with people in a destitute state and feel that they cannot and should not just walk by on the other side.
	As to public policy, it seems that the present state of the law is likely to cause people to take to begging as the only way of keeping themselves alive and, possibly, to resort to quite aggressive begging, which many will find offensive in itself. It is also bound to be a strong incentive to those affected to find whatever employment they can at whatever wage rate in the black economy. Surely that runs totally contrary to the Government's minimum wage policy.
	On all those grounds I am happy to support the amendment and I wish it very well.

Lord Avebury: At the time Section 55 was introduced by the Government, I believe it was generally understood that the intention was to deny benefit to those who had entered the UK in some other capacity and who claimed asylum either when they reached the end of the road of their permitted leave to remain or at some point after their leave had expired and when they were detected as overstayers. That was certainly how Mr Neil Gerrard, the chairman of the All-Party Refugee Committee in another place, thought it was supposed to operate. The Minister did not contradict his assertion that people had been denied support even if they applied the day after arrival. My noble friend has given an example of someone who applied on the very day of arrival, but was denied support.
	In Committee in the other place the Minister, Miss Beverley Hughes, referred in the last few words she spoke before the guillotine fell to the December 2003 concession, under which people who applied within three days were supposed to be given support. She did not say whether people who had applied within three days prior to the concession and had been denied benefits would have them restored. As the noble Baroness may recall, the Inter-Agency Partnership found that almost half of those refused support under Section 55 between November 3 and 21 last year had actually applied either on the day of their arrival or the day after. The Minister said nothing about why someone who applies within three days should be considered meritorious, while someone who applies within four or five days would be considered undeserving of benefits. I should be grateful if the Minister could explain the Government's thinking on these points.
	I believe that the noble Earl, Lord Sandwich, mentioned the communication we have all received from the Mayor of London saying that the 72-hour concession was not likely to make a significant difference because it was only a presumption which had to be confirmed by National Asylum Support Service caseworkers, who have not been particularly generous in their interpretation of Home Office guidance. The Mayor pointed out that a great many people with well-founded claims do apply more than 72 hours after entry, and they will continue to be destitute.
	I want to draw attention to a matter notified to us by the Children's Society; that is, the large number of asylum seekers from the A8 countries who are about to be added to the pool of Section 55 indigent. NASS wrote to local authorities on April 1 saying that, from the end of this month, those people will lose their rights to benefits and accommodation. They will of course acquire the right to work, but not only will they have to find a job by the end of the month and satisfy an employer that they are lawfully able to work, they will also have to find living accommodation with a landlord prepared to wait until the arrival of the first wages payment or salary cheque. In the real world, landlords ask for a deposit up front. None of these people will have that kind of money.
	We have already discussed the problems arising from Schedule 3 to the Nationality, Immigration and Asylum Act 2002 in relation to another group which has been made ineligible for benefit under it: those whose immigration claims have failed. The same problems arise with all of the classes of person denied benefits; that is, the duty to support children, if not the parents, and the duty to support any person where failure to do so would breach their rights under Community law or the ECHR. But in the case of the A8 nationals, no provision has been made for NASS to conduct an assessment to ensure that those rights would not be affected by an abrupt withdrawal of support. Some of them would be incapable of work because of pregnancy or their duty to care for young children or sick relatives.
	In the past few weeks, as we have heard, practitioners have received an avalanche of claims from agencies and individuals with either Section 55 refusals or, now, EEA support withdrawal crises. Mr Jean Patrick of Brent Initiative Community Action has told us that he had 16 Section 55 refusals in a single day, half of them having claimed on the day of their arrival. So it appears that the December concession has not yet dawned on NASS officials in Brent. But Mr Patrick says that he is unable to take on any of the Section 55 cases submitted to him in the past two weeks because he is absolutely swamped with A8 cases.
	Does the duty to support people where their community or ECHR rights would otherwise be breached extend to NASS itself as well as to local authorities? If so, why is it not conducting assessments of the 2,571 A8 asylum seekers on its books instead of handing over the entire responsibility to local authorities on 1 May?
	Among this A8 group there are some who had become eligible for indefinite leave to remain under the backlog clearance programme. Some had even been sent forms and returned them, but the forms had yet to be processed. Others had not yet been sent the forms. What is the benefit and accommodation situation for these people?
	The combination of Section 55 and the dumping of EEA nationals by NASS at the end of this month without transitional arrangements or an agreed mechanism for looking after those unable to work or whose rights are in jeopardy, threatens chaos for local authorities, agencies and the courts, and an increase in the numbers sleeping rough without the means of providing themselves with the basic necessities of living, as described by the IAP. Will the Minister agree to meet us, together with representatives of local authority and non-governmental organisations, to discuss all these problems as a matter of urgency?

The Lord Bishop of Chester: My Lords, I should like to identify myself in general terms with all noble Lords who have spoken thus far. This is an extremely serious issue in our midst. As has been mentioned, individual church groups often get involved in caring for those who have no other means of support and subsistence. It does not happen much in my diocese—it is a long way from the main ports and it does not have the large immigrant communities to which people often go—but I know from talking to others and receiving correspondence just how difficult and critical the stories are of people who are directly affected.
	At the same time, I have sympathy for the Government. They face a most difficult question. One of the problems is that the question tends to get caught up in political debate. It seems to me that we have to search for cross-party agreement as to what to do with a problem that, ultimately, we cannot control. It is impossible to control in advance how many people will come to this country with a genuine claim for asylum, a point made previously by the noble Earl. It is absolutely right. I can understand the political pressures on the Government which lead to the setting of targets—the Prime Minister stating that numbers will be halved by a certain date and so on—but, frankly, the thought that we can control all the problems in our midst is a modern myth that does not face up to reality.
	There are great questions about global warming, terrorism, what to do with despotic regimes and how to control large flows of population from one country to another. The flows will get greater and greater in the years to come as transportation gets easier and language barriers are less. In a society which more and more operates on the basis of freedom of opportunity—something that I am happy to welcome—you will always have a bigger difference between the winners and the losers. Societies based upon freedom always generate an underclass. That is the story of America in many ways and it has become true in this country in the past 20 or 30 years on the back of considerable economic prosperity.
	This problem will not simply go away. We should admit that and try and find a way in which we can achieve some cross-party understanding which can be presented, in those terms, to our country, and avoid getting caught up in political debate. Once that happens, the people who lose are the asylum seekers. One thinks of the questions we remit to Select Committees or Royal Commissions. This strikes me as a question which must get beyond the party political debate.
	I can see that simply removing the section by amending the Bill in this context will not in itself solve the problem, but the problem will not easily go away. As the noble Earl said, every society is judged by the way it treats the weakest in its midst. That is a deep truth in every society. That is why what goes on in our prisons and young offenders' institutions is such a scandal. I recently visited one and was absolutely horrified at what happens. Eighteen and 19 year-olds in a young offenders' institution were routinely sworn at by the prison officers and banged up 16 or 17 hours a day. This is another debate which has to be taken out of the to-ing and fro-ing of party politics.
	While I support all the speeches that have been made so far, I have great sympathy with the Government's position. Somehow we must find a better way of addressing these issues.

Baroness Anelay of St Johns: The noble Earl, Lord Sandwich, was kind enough to telephone me last week about his amendment. I made it clear that I was not in a position to be able to support him. However, I recognise, as have other noble Lords during the debate, that this is a highly sensitive and complex issue that will, as the right reverend Prelate said, not go away. It is right that the noble Earl has tabled this amendment. It holds the Government—any government, of any political party, who have to consider these issues—continuously to account.
	It is not only right that there should be continuous parliamentary scrutiny of these matters, but it would be useful if the Government looked again at the recommendation of the Select Committee on Home Affairs in January this year that there should be an independent review of Section 55. I agree with the right reverend Prelate that there are advantages, in some issues, of going outwith the normal party political argument. This may well be one such issue. I shall be very interested to hear how the Government have reflected on that recommendation since January this year.
	I am also grateful to the Refugee Children's Consortium for the careful briefing it has given noble Lords on the amendment. One issue which was referred to fleetingly is the fact that when we pass such measures, there can be unintended consequences, and I would like to draw the Minister's attention to one. The Refugee Children's Consortium refers to the fact that pregnant women can be deprived of all manner of support under Section 55, which can place both them and their child at risk. Have the Government looked at that particular problem since the operation of Section 55 and, if so, what has the result been? If the Government's attention has not been drawn to that, might they be prepared to consider it and receive representations from the Refugee Children's Consortium?

Baroness Scotland of Asthal: My Lords, I thank all noble Lords who have participated in this debate. The noble Earl is right that this is the greatest degree of scrutiny that this provision has had to date.
	I should like to say a word in response to the comments of the noble Lord, Lord Hylton, about the stage at which this matter comes before your Lordships today. As noble Lords know, we are now permitted—indeed, enjoined—to sit on all these days until at least 10 o'clock. The Committee stage has to be agreed between the usual channels. It was hoped initially that this part of the Bill would be reached somewhat earlier in the previous debate. It is simply fortuitous that it has come before the Committee at this time. Others may say that the noble Lord's comments should have been targeted at those who came before us, as opposed to those who have waited so diligently for our line to be reached today.
	The noble Earl, Lord Sandwich, made a number of points, with which many noble Lords have agreed but not all of which I feel able to agree with. I wish gently to make some points about the context in which some of the reports should be put. The noble Earl rightly mentioned the GLA report. Noble Lords will know that that survey used a very limited sample; the response rate was only 24 per cent and only 248 people were covered, of whom only 14 per cent were said to have been affected by Section 55. It is easy to get the wrong impression from the figures. However, I take on board entirely the basis of the noble Earl's concern: he is concerned that those who should have had succour did not receive it.
	I also acknowledge what was said by the right reverend Prelate the Bishop of Chester. It is easy to take an unbalanced or one-sided view of what is inherently a difficult problem. In considering these issues, there is a tension between providing proper succour for those who seek asylum and dealing with another issue—that of economic migration. One can understand why a number of individuals in other countries seek properly to move from that country for adventitious advantage, for economic reasons. One does not blame them for so doing, but one must recognise that there is a difference between asylum and economic migration.
	This Government have taken strenuous steps to enhance the opportunity of legitimate means for encouraging economic migration in a proper, planned way. We dealt with some of those in our earlier debates on other subjects. The question is how we achieve that proper balance. Section 55 has contributed to halving the asylum intake over the past 12 months, from October 2002. It achieved its original purpose. Throughout that period, the way in which it operated in practice was kept under close review.

Earl Russell: The Minister is saying a great deal that makes sense, but can she show me any way in which Section 55 distinguishes between genuine applicants and economic migrants? If so, how?

Baroness Scotland of Asthal: We have sought to say that it distinguishes between those groups by encouraging those who come to this country to make their application as soon as possible, so that we can together differentiate between one group or another.
	Throughout the period, the way in which Section 55 has operated in practice has been kept under close review. As a result, as noble Lords have said, the policy was adjusted on 17 December 2003 to allow the three days following the arrival in this country to lodge the asylum claim. That has resulted in about half of those who are subject to a Section 55 decision being granted access to asylum support, as opposed to about 75 to 80 per cent being refused support, which was the position before 17 December. So it is not right to say that a significant change has not taken place; it has.
	To answer the question asked by the noble Earl, Lord Sandwich, the Government are keeping the operation of the policy under review, including the way in which it interacts with Article 3 to ensure that, while it continues to provide the necessary deterrent, it is applied only to the extent necessary to deliver our overall aim of an effective asylum process that encourages applicants to come forward and to be frank with us. If further adjustments are necessary, the Government will make them in line with the original statement made by my noble friend Lord Filkin on 17 October 2002.
	I should say to the noble Baroness, Lady Anelay, that the recommendation in relation to the review has been considered. It was raised by the Committee. We shall look at that. I cannot give the noble Baroness any promises in that regard but it is certainly something that the Government will bear in mind.
	The noble Lord, Lord Avebury, and the noble Earl, Lord Russell, mentioned the issue of the number of judicial reviews that are currently before the court. The Committee will know that there are three test cases which await determination by the court. Many of the judicial reviews that are currently pending before the court are reliant on those three test cases. Many of them are waiting almost in abeyance until they are decided. Once those three decisions are available, of course the Government will consider further what to do in response to those judgments and in relation to this policy. That would be an appropriate opportunity for us to look at those issues.

Lord Avebury: Has the Minister left the subject of the three-day concession? Will she give me an answer to the question of what happens to people who were denied benefit having claimed within the three days and who now reapply following the concession?

Baroness Scotland of Asthal: I have not left that subject. As the noble Lord will know, I try to give a comprehensive answer and take the points in order. It was convenient to tell the noble Baroness about certain issues as I was talking about whether there would be a review.
	It is not proposed that we should use retrospectivity in relation to those cases which were dealt with before December. Those decisions were lawful within the context. The noble Lord will remember that we had three cases dealing with whether it was or was not appropriate to make that determination at that time. The authorities supported that action. We do not intend to go back over those but we certainly took fully into account the comments that were made by a number of agencies and individuals about their operation. It was for that reason that my right honourable friend the Secretary of State for the Home Department, David Blunkett, made the statement regarding the change in relation to three days. Since that period it has operated as I have just indicated.
	The noble Earl, Lord Russell, also asked whether we had advertised. We have done so. Before implementation these provisions were advertised overseas. The posters have continued to be displayed since then. It is quite clear that there is an active appreciation and interest about what the provisions are in individual countries to which people seek to move. Therefore, this information is a matter of some importance.
	The number of judicial reviews has reduced now compared with those before Christmas. Before Christmas there were 50 or 60 a week. There are about 10 a week now. Effective reconsideration of the process since 24 November 2003 has provided an efficient and timely review mechanism. That has helped. As I have indicated, the three-day process eased the situation in which people found themselves.
	It is important to remember that Section 55 was part of a wider package of measures contained in the 2002 Act aimed at creating a more streamlined and cohesive asylum system. It was designed to tackle abuse of the asylum system and send a clear message to those who are simply economic migrants that they will not be supported at public expense. It also seeks to bring about a change in behaviour so that genuine asylum seekers should make an asylum claim immediately at the port of arrival or as soon as reasonably practicable afterwards. Section 55 has played its part in reducing asylum claims.
	It is a tough policy but there are safeguards to protect the vulnerable. Families are exempt from Section 55 and support will be provided, as noble Lords know, if it is necessary to avoid a breach of Article 3 of the European Convention on Human Rights, even if the claim was not made as soon as reasonably practicable. Unaccompanied asylum seeking children are not affected by Section 55—they are supported by local authorities under the Children Act 1989. Those with care needs are also supported by local authorities under the National Assistance Act 1948. It is open to anyone who receives a negative decision under Section 55 to request reconsideration, as I have indicated.
	In relation to NASS support—

Earl Russell: I am sorry to return to the point, and I am grateful to the Minister, but can she give me any reason at all to suppose that Section 55 has caught more economic migrants than genuine applicants?

Baroness Scotland of Asthal: It has certainly helped to differentiate those who have a bona fide claim and those who do not. That is my understanding. Whether the figures go further, I know not. I certainly undertake to write to the noble Earl if there is a better answer to be had that is not available to me now.
	I was also asked about the NASS support for accession nationals. Members of the Committee will know, not least from our Friday debate in relation to an order on the subject, that we have now written to all accession nationals supported by NASS or a local authority under the interim provisions to explain their options. NASS outreach teams are following that up with home visits to ensure a smooth transition.
	Accession nationals currently supported by NASS or a local authority will have three options. They can register as workers under the Home Office workers' registration scheme, and will be eligible for only certain DWP benefits and social housing. They can remain in the United Kingdom as jobseekers but become self-supporting—that is, stay with friends or relatives. Alternately, they can leave the United Kingdom, and local authorities will have the power to provide temporary accommodation to families, and make travel arrangements to their country of origin both for families and singles.
	The work registration scheme will go live on 1 May. A designated, dedicated casework team has been recruited and training is under way. Accommodation for the team and the IT systems are in place. We went through the details of that on Friday. We hope that the scheme will come into operation on 1 May smoothly.
	I understand the concern expressed in relation to Section 55. The Government's view is that it has utility and has been amended to make it respond more creatively and effectively to the needs identified. We will continue to review it, and certainly will review it when the matter comes for further consideration as a result of the cases currently before the Court of Appeal.
	One specific point to which I did not respond, and which I should have mentioned, was in relation to pregnant women. The noble Baroness will know that they are a group of people who are very vulnerable and are always given very careful consideration. If they are visibly pregnant and in advanced stages, Article 3 provides the safeguard. Caseworkers have been trained to take great care in considering all potentially vulnerable cases, so it is very much an issue that is at the forefront for those who make such decisions. I hope that the noble Baroness will feel a little comforted as a result of that.
	I invite Members of the Committee not to press the amendment. Particularly bearing in mind that it is now two minutes past 10, I shall say no more.

The Earl of Sandwich: I thank the noble Baroness very much for that full explanation of why we have to live with Section 55. She may have anticipated that I was not expecting her to withdraw the section at a stroke. On the other hand, I hoped that she would recognise the strength of the opposition to it and, even more, the arguments against it continuing in its present form. At the very least, the Home Office could more seriously after today consider the possibility of the review, which was supported by the noble Baroness, Lady Anelay, if only in relation to Court of Appeal cases. That is an advance.
	I had hoped that some of the arguments for retaining the section would fall away. For example, the three-day concession may mean that fewer people are destitute, but thousands more are bona fide applicants who do not qualify for assistance and still have to prove their claims the hard way. To my mind, there is still no evidence that Section 55 is an effective deterrent.
	When referring to that section, the noble Baroness used phrases suggesting that it had "contributed to" or "played its part in" halving the number of applicants. I was grateful to the noble Earl, Lord Russell, because it would be helpful if the Minister wrote to him—and copied the letter to me—explaining how those calculations are made. Of course I do not intend to challenge the figures given by the noble Baroness, but we will return to the matter at the next stage.
	I also thank other noble Lords for making important contributions. For example the noble Earl, Lord Russell, asked how people could hear about our regulations in the United Kingdom. The Home Office has an exaggerated view of its own publicity. The noble Lord, Lord Avebury, mentioned the important question of the 2,000 or so A8 asylum seekers, which is causing a degree of chaos. The right reverend Prelate raised our sights and made a case for sympathy for the Government, which we all appreciated half way through. I was also glad to hear the reassurance given by the Minister about the outreach, including efforts being made by NASS to research the true situation of asylum seekers through careful casework. That is always encouraging.
	We shall return to the matter and we will read the debate carefully. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 12 [Retention of documents]:

Baroness Anelay of St Johns: moved Amendment No. 25:
	Page 12, line 27, leave out from "document" to "an" and insert "is detained by"

Baroness Anelay of St Johns: In moving Amendment No. 25, I shall also speak to my Amendment No. 26. The debate on whether Clause 12 should stand part is in the same group and appears in the names of the noble Lords, Lord McNally and Lord Avebury.
	I am grateful to the Immigration Law Practitioners' Association for their briefing on the background to the clause. These are probing amendments that seek to clarify the Government's intentions in adding this new clause to the Bill at Report in another place. At that stage there was no time for the Minister even to introduce and explain the clause, nor for the House to debate it.
	Clause 12 provides the Secretary of State or an immigration officer with the power to retain documents—which could include a passport or a birth certificate—while it is suspected that the person to whom the documents relate is liable to removal; and that the retention of the document may facilitate their removal from the United Kingdom. The Explanatory Notes state that this clause complements current powers, such as those in paragraphs 4(2A) and 18(2) of Schedule 2 to the Immigration Act 1971, which already allows the seizure and retention of documents in certain circumstances.
	Can the Minister explain in what respect the new powers in Clause 12 complement the existing ones and in what respect they add to them? In what circumstances are the documents likely to "come into the possession" of the Secretary of State or an immigration officer? The drafting is rather odd. It sounds as though someone could be trying to obtain documents by stealth. I am sure that that is not the case, but the drafting has some odd implications.
	Do the Government agree that the provision in the clause could authorise the Home Office or the Immigration Service to hold almost any document of a person with limited leave to remain—who would be liable to removal if a future application were refused, or if he overstayed—as well as those here without authority? There is no time limit given for the retention of the documents. It is not even stated that the documents would be returned to the person on removal or on being granted leave. Why is that? Do the Government intend that there should be occasions when documents would not be returned and, if so, what would those occasions be?
	My reason for tabling the amendments is to ask the Government to put on the record their explanation for this clause and to confirm which documents they expect to hold and how and when they should be returned. I beg to move.

Lord McNally: Following the noble Baroness, Lady Anelay, is increasingly becoming like following the school swot. So assiduous is she in preparing herself for her amendments that, looking desperately through the Immigration Law Practitioners Association brief, I could find nothing to delay the Committee beyond the questions she has put.
	My noble friend Lord Avebury had the same intentions in the more brutal method of getting rid of the whole clause. The guillotine in the Commons prevented discussion on the matter and that is why the Government want the clause.

Lord Hylton: The Government have a lot to explain in particular about the drafting of Clause 12. Why is the 1971 Act thought to be insufficient in what it says about documents? The Explanatory Notes blandly state that Clause 12 "complements" the 1971 Act. What on earth does that mean?
	The noble Baroness, Lady Anelay, rightly pointed out that the clause says nothing about the return of the documents. How long may they be retained and when will they be returned? I most definitely hope that they will be returned before a person is removed from this country, otherwise there surely is a danger of the person becoming undocumented and a further risk of his ending up in a stateless condition. The burden of proof is on the Government.

Lord Avebury: The clause is drafted so that the document may not be owned even by the person to whom it relates. Is that supposed to deal with the fact that passports are generally the property of the issuing authority? I do not know whether that applies also to driving licences, identity cards or student cards. However, does the Minister agree that, as drafted, the clause could refer to a document which bears little relation to the person, such as the bank statement belonging to someone else showing a payment to that individual, and that that document could be seized?
	Is it one of the purposes of the clause to legalise the Home Office practice, presently followed, of hanging on to the passports of individuals who send them in with their applications for leave to remain when it is alleged that they entered illegally or are overstayers? Apparently, the Home Office continues to retain the passports even when the person concerned indicates a willingness and intention to depart voluntarily. I can understand that the IND may not be satisfied that the person genuinely intends to leave, but there has to be some procedure for reuniting a departing suspect with his passport.
	ILPA has given us a couple examples of how the Home Office is already misusing the power which is supposedly conferred by this clause. Mr C, an asylum seeker, married a British woman in 2000 when he applied for leave to remain as her spouse. The application was refused in December 2001 and again when his wife made further representations. In June 2003, he applied to the High Commission in New Delhi for entry clearance to join his wife and was given a date of interview of 10 September. His solicitors then repeatedly asked the Home Office for his passport so that he could return to India for the interview. That, of course, would have meant abandoning the asylum claim he had made. However, the Home Office failed to respond. In December 2003, it told his solicitors that if they gave a few weeks' notice of his intention to travel, it could arrange for him to collect the passport after he had passed through immigration control.
	Mrs J tried to stay in the UK with her second husband and their two young children early last year. She had no reply from the Home Office, but was advised that she needed to apply for entry clearance from her West African country of origin. She applied repeatedly but in vain for the return of her passport last summer until finally the Home Office told her that the passport had expired and that it would get her a temporary travel document—a process which took until January 2004.
	Considering that the clause relates to persons who may be liable to removal, one would have thought that the IND would be only too pleased to facilitate their departure to cross them off the books. We want to know why those problems arise and why the Government should be given much greater powers when they cannot manage their existing powers to hold on to passports more efficiently and responsibly. How can we be confident that all documents will be returned properly when the person concerned has a need to travel? I hope that the Minister will explain the purpose of the clause, which documents are likely to be retained and the length of time for which they will be held.

Earl Russell: The return of documents is a genuine problem. I was once called in on behalf of a colleague in the University of London, who was Georgian by birth and whose research was in Armenia. He had exceptional leave to remain—there was no question of his bona fides—but the Home Office hung on to his passport, I think, for four years. During that time, his research was brought to a dead halt and his college's income was thereby considerably diminished. That case was solved by calling in Lord Williams of Mostyn, a person of whom there are few equals. But you cannot have a Lord Williams of Mostyn for every case where the Home Office computer lets you down.

Lord Hylton: I am glad that the noble Earl, Lord Russell, has raised the point of exceptional leave to remain. For years, there have been problems. People in that category, of perfectly good standing in Britain, have been unable to travel or impeded from travelling for a holiday or to visit a relative in another country simply for lack of documentation.

Baroness Scotland of Asthal: I find myself in a quandary, because I am able to answer each and every question save for that raised about a particular case by the noble Lord, Lord Avebury. It would probably be wrong, if not improper, to answer him from the Dispatch Box. However, I see that it is a quarter past 10. I am likely to take 15 to 20 minutes in answering all those questions. I am entirely in your Lordships' hands. If it would suit your Lordships, I propose to give a rather staccato answer and then to undertake to write in depth. I would anticipate my reply being seven pages' long. I am entirely within your Lordships' hands. If noble Lords would not like me to take that course, I shall not do so.
	I shall answer noble Lords in brief. The 1971 Act does not cover caseworkers, but only immigration officers. The provision would widen the scope of documents that can be retained to include those that may help the redocumentation process. The noble Baroness, Lady Anelay, asked which documents we expect to be able to hold and what the time limits would be. We expect to hold any document that facilitates removal, but primarily passports and identity cards. We must be working towards removal, so the power would be limited. Such documents will be returned unless they are forged or counterfeit. The noble Baroness, Lady Anelay, and therefore all other noble Lords, asked about "come into possession". They come into possession if they can be supplied with applications and they can be obtained during enforcement visits. Those are the two main ways.
	Those are the basic reasons for the amendments. I absolutely understand that there has been little opportunity to discuss the issue and to interrogate the Government. That is why I would be more than happy to put what I would have said to the House into writing and to send it to each noble Lord who has participated in the debate. If further comments arise from that, I would be most happy to deal with them on Report. Unless any noble Lord wants me to take a different course—I am quite happy to devote 15 or 20 minutes to my full answer—that is the course that I am minded to take.

Baroness Anelay of St Johns: For one brief moment, I thought that a noble Lord was about to say that they wished to let the Minister expand the answer.

Baroness Farrington of Ribbleton: It was voices offstage.

Baroness Anelay of St Johns: I may be the class swot, but I think that I would have swatted such a voice out of court as well at this late hour. I shall simply thank the Minister for her staccato response and say that we look forward to a greater response. The difficulty is always that the lack of time and consideration that may be paid to measures in another place have to be put right here. However, at this time of night, all we can do is put down a marker and, as the noble Baroness says, have the opportunity of considering her response to see whether we need to return to the issue on Report.
	I simply signify that I accept what she says as regards the return of passports and ID. Those are not the personal property of the holder as such, and it would not be right for them to be returned if they were forged, counterfeit or stolen in any respect. I will look carefully at other matters that could be personally owned and ensure that those could be properly returned at the right time. At this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 26 not moved.]
	Clause 12 agreed to.

Baroness Farrington of Ribbleton: I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.
	House adjourned at twenty-two minutes past ten o'clock.